MARKETS-METALS (UPDATE 3) * Copper stocks at highest since mid-July * Inflation concerns remain due to oil rise * Coming Up: U.S. private sector employment data -1315 GMT (Recasts, updates prices, changes dateline from SINGAPORE) By Melanie Burton LONDON, March 2 (Reuters) - Copper fell on Wednesday on a firmer dollar and concerns a higher oil price will impact on global growth, while stocks of the metal used in construction and power continued to build, signalling weak demand. Three-month copper on the London Metal Exchange fell to $9,837 a tonne by 1124 GMT, from $9,885 at the close on Tuesday, when it snapped a three-day winning streak. "Copper is seen at risk of a correction short term as rising LME inventories suggest China is drawing down its own stockpiles rather than turning to the international market," said Stephen Briggs, an analyst at BNP Paribas. Copper stocks rose on Wednesday to their highest since mid-July last year, resuming an uptrend in place more or less since December. As tensions in the Middle East and North Africa simmered, Brent crude rose towards $116 a barrel, prompting concerns about high inflation. "The moderate fall in (copper) prices continues this morning. This is probably largely due to high and still rising oil prices, which are fuelling inflation concerns, which could in turn lead to a weakening of global growth," Eugen Weinberg, an analyst at Commerzbank, wrote in a note. Faltering risk appetite supported the dollar, keeping it off a 3-1/2 month low versus a basket of currencies. EIGHT MONTH HIGHS Copper stocks rose by 3,275 tonnes, the latest data showed, bringing LME inventories to 423,550 tonnes, the highest since mid-July 2010. Stocks have climbed by a fifth since mid-December, mostly into LME locations in Asia, as metal is diverted from Chinese ports that are already bulging with stocks. "Stockpiles at exchanges remain elevated after sizeable inflows in January and February," said Credit Suisse Private Banking in a note. "Accordingly, we expect industrial metals to have further upside once inventories start to drop more convincingly again." Aluminium output from top producer China could rise by 24 percent this year to 20 million tonnes, an official of the China Nonferrous Metals Industry Association said on Wednesday. Global aluminium supply this year is expected at around 45 million tonnes. This is around one million tonnes more than an estimate from Aluminum Corp of China Ltd, the world's most valuable aluminium company, made earlier this week. "The difference of a million tonnes is China producing more or less than it consumes. I would say China is going to remain roughly self sufficient for the coming years. This is certainly a fairly downbeat statement," said Briggs of BNP Paribas. Aluminium traded at $2,585 a tonne, down in line with the rest of the complex from $2,610 at the Tuesday close. The power-intensive metal hit a 2-1/2 year peak the prior session at $2,617.25 on the back of rising prices of oil. Across other metals, zinc traded at $2,481 a tonne, from $2,515, while lead stood at $2,529 from $2,555. Stainless steel material nickel slipped to $28,400 from $28,775 and tin edged down to $31,650 from $32,200. Metal Prices at 1120 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent move COMEX Cu 446.80 -3.25 -0.72 444.70 0.47 LME Alum 2610.00 0.00 +0.00 2470.00 5.67 LME Cu 9859.00 -1.00 -0.01 9600.00 2.70 LME Lead 2554.50 -0.50 -0.02 2550.00 0.18 LME Nickel 28770.00 -5.00 -0.02 24750.00 16.24 LME Tin 32200.00 0.00 +0.00 26900.00 19.70 LME Zinc 2515.00 0.00 +0.00 2454.00 2.49 SHFE Alu 16990.00 0.00 +0.00 16840.00 0.89 SHFE Cu* 74700.00 700.00 +0.95 71850.00 3.97 SHFE Zin 19235.00 -80.00 -0.41 19475.00 -1.23 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Writing by Sue Thomas; Editing by Anthony Barker)

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