LONDON - Copper dipped on Wednesday on a strong dollar, but a surprise rise in euro zone industrial output limited further losses, and investors remained wary ahead of U.S. data later in the day. Three-month copper on the London Metal Exchange was $9,156 a tonne in official rings from $9,170 at the close on Tuesday. It hit a Wednesday session high of $9,213, its highest since June 1. Euro zone industrial output rose in April from March, defying expectations for a decline, data showed on Wednesday, although economists said the region’s economic growth rate was still likely to slow significantly in the second quarter. “While better than expected, it nevertheless ties in with the view that the euro zone manufacturing sector has come off the boil after a strong start to 2011 following a decent recovery in 2010,” said Howard Archer, an economist at IHS Global Insight. Later on Wednesday, the United States releases its May consumer price index. Economists in a Reuters survey expect a 0.1 percent rise compared with a 0.4 percent increase in April. It will be followed by industrial output figures. The euro was weaker against the dollar, limiting copper’s gains. A stronger dollar makes metals more expensive for holders of other currencies. Oil fell as the dollar rose against the euro, after euro zone ministers failed to reach agreement on a second bailout for Greece, and as rising gasoline stockpiles in top consumer the United States signalled fuel demand was stalling. Aluminium, one of the most energy-intensive metals to produce, was $2,610 per tonne in rings from a close of $2,627, underpinned by reports that China appeared to be heading for its worst power shortage since 2004. “Should this occur, there will likely be an impact on aluminium and nickel pig iron production there,” RBC Base Metals said in a research note. “It’s worth keeping an eye on these developments.” Alumiinium flares A backwardation has developed in the front months of the Shanghai aluminium curve, which indicated the market there is preparing for tight physical markets in the months to come, RBC said. Data on Wednesday showed aluminium stocks in LME-monitored warehouses fell by nearly 10,000 tonnes to 4.621 million tonnes. Inventories have dropped by 90,000 tonnes since a record high hit in May. Most of the material is tied up in financing deals that have kept it off the market and supported prices, and many of these deals are now unwinding. Copper inventories in LME-monitored warehouses also fell for a third session, with most coming out of warehouses in Gwangyang, South Korea, data on Wednesday showed. Inventories are down 5,000 tonnes this week from one-year highs. Stocks of copper in bonded warehouses in Shanghai are estimated to have fallen by around 50 percent from above 600,000 tonnes earlier this year as merchants have sold the material into China’s backwardated market to take advantage of strong prompt prices. “There are some more positive signals for copper at the moment,” Standard Chartered analyst Daniel Smith said. “The underlying picture for copper is much better than the macro data would suggest.” “The premiums for copper have jumped in China, and there’s talk the bonded warehouse stocks have come down sharply in the past few weeks,” he said. Analysts say China is likely to return to the copper market and vindicate predictions of a deficit this year, easing concerns that its absence could fuel a surplus. Tin was at $25,500 per tonne in rings from $25,650, while zinc, untraded in rings, was at $2,272 from a last quoted 2,280.

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