By Melanie Burton and Michael Taylor LONDON, Sept 23 (Reuters) - Base metals scaled multi-monthpeaks on Thursday, underpinned by positive demand expectationstowards the year end, while investors eyed a flurry of U.S. datafor further direction later in the session. Benchmark copper on The London Metal Exchange was traded at$7,883 in LME rings, up from Wednesday's close of $7,840 pertonne. Used in power and construction, the red metal earlier hita new five-month high at $7,906.25 per tonne. Three-month aluminium pushed above $2,275 a tonne for thefirst time since April, while zinc hit $2,244.50, its highestlevel since the start of May. "Certainly people typically come back from the summerholidays and demand picks up," said RBS head of commodityresearch Nick Moore. "The move that we've seen since September has been more todo more with people positioning themselves ahead of LME week ...which suggests we could see a quieter end of the year." The dollar steadied after sharp selling the previous daywhen the U.S. Federal Reserve hinted at more easing, pushingTreasury yields down and keeping the greenback pinned near afive-month low on the euro. A weaker dollar makes industrial metals cheaper for holdersof other currencies. Foreign exchange markets could exert fresh pressure onmetals later this session, with volumes drained by holidays inAsia. China, Japan, Hong Kong and South Korea are closed forholidays this session. On the LME volumes were very low with under 4,000 lots ofcopper having changed hands on LME Select. Later this session, weekly U.S. jobless claims are due at1230 GMT, while existing home sales for August and U.S. leadingindicators for August are pegged for 1400 GMT. European equities fell, extending their decline for a thirdday, as fresh euro zone data added to existing worries about thestrength of the global economic recovery. The pace of growth in the euro zone's services andmanufacturing sectors slowed much more than expected this month. While lower industrial demand from a major consumer of basemetals does not bode well for physical demand, commodities inrecent years have grown in popularity as an investment asset. Commodity assets under management fell by $3 billion from arecord last month probably represents a more active approach tomanaging risk as institutions become more sophisticated in theircommodity trading, said Barclays Capital in a note. "The picture has improved markedly so far in September.Macroeconomic pessimism is lessening afterstronger-than-expected European growth, better US data and signsthat the policy-induced slowdown in China may be bottoming," itadded. COPPER STOCKS RESUME FALLL Stocks of copper at LME-registered warehouses resumed theirdecline today, the latest LME data showed. Copper inventories fell by 1,975 tonnes to 380,125 tonnesand remain close to their lowest since last November.Inventories have now fallen by one third since mid February,when they stood at 555,075 tonnes, the highest level sinceOctober 2003. As well, the global market deficit for refined copperwidened in the first half to 281,000 tonnes from 125,000 tonnesthe year before, the International Copper Study Group said thisweek. Inventories fell across four of the six major contractstoday, highlighting a pick up in demand post summer, however therecent price rise, given the absence of Chinese consumers, couldbe overdone, analysts said. "Although better fundamental data recently justified a risein copper prices, this was exaggerated in our view andcorrection potential has thus resulted," Commerzbank said in aresearch note. Across other metals, aluminium traded at $2,266.50 a tonnein LME rings versus $2,235, zinc at $2,235.50, against a closeof $2,192 per tonne, and lead at $2,245 versus $2,223.50. Nickel pared gains and was untraded in exchange rings, butlast bid at $22,675 in exchange rings from $22,560. Used instainless steel, the metal reached a 4-1/2-month peak of $23,570last week. LME nickel inventories rose by 468 tonnes according to LMEdata today. Tin meanwhile was untraded but last bid at $23,630in LME rings from $23,300 at Wednesday's close. Metal Prices at 1225 GMT Metal Last Change Percent Move End 2009 Ytd Percent move#VALUE! LME Alum 2256.00 21.00 +0.94 2230.00 1.17 LME Cu 7844.00 4.00 +0.05 7375.00 6.36 LME Lead 2234.00 10.50 +0.47 2432.00 -8.14 LME Nickel 22500.00 -60.00 -0.27 18525.00 21.46 LME Tin 23400.00 100.00 +0.43 16950.00 38.05 LME Zinc 2224.00 32.00 +1.46 2560.00 -13.13 SHFE Alu 15725.00 -35.00 -0.22 17160.00 -8.36 SHFE Cu* 59830.00 -420.00 -0.70 59900.00 -0.12 SHFE Zin 17805.00 -300.00 -1.66 21195.00 -15.99** 1st contract month for COMEX copper* 3rd contract month for SHFE AL, CU and ZNSHFE ZN began trading on 26/3/07

Source