(updates with official prices, add comments, details) * Copper demand expected to pick up in second half of 2011 * Copper stocks fall to lowest in more than 2 months * Aluminium inventories fall to lowest in more than 5 months By Silvia Antonioli London July 4 (Reuters) - Copper steadied on Monday as a stronger dollar counterbalanced an improvement in market sentiment after data last week showed U.S. manufacturing had grown at a surprisingly strong pace in June, easing concerns over an economic slowdown. Benchmark copper on the London Metal Exchange traded at $9,435 per tonne in rings, the same level seen at the close on Friday. Earlier, the metal used in power and construction hit a session high of $9,520.25 a tonne, its highest since April 28. "I think the market digested what happened on Friday and some fears have eased a bit," said Credit Suisse analyst Stefan Graber. "Over the past few weeks the market has been focusing on global growth concerns and worries over Greece. With these concerns easing, the focus is shifting back to fundamentals, and the copper market still shows some tight conditions." The pace of growth in U.S. manufacturing picked up for the first time in four months in June, surprising investors and fueling optimism that the recent economic slowdown would be temporary. China's PMI data, however, dipped further in June, pointing to a contraction in factory output for the first time in 11 months. The Chinese data was not completely unexpected, according to Graber. "It shows that tightening measures are working in preventing the economy from overheating. Now the market expects that China will not take many more measures and this should allow (metals)demand to pick up" Graber said. A slightly stronger dollar against a basket of currencies though was weighing on metals prices. The euro eased from one-month highs against the dollar after Standard & Poor's said a debt rollover plan being considered for Greece may put the country into selective default. A stronger U.S. currency makes dollar-priced commodities costlier for holders of other currencies. TIGHT SUPPLY As investor focus switches from economics to fundamentals, supply tightness and expectations of growing demand lend support to copper prices, analysts said. "An underlying improvement in demand for aluminium and copper in China and Japan is providing support," Standard Chartered said in a note. "Physical premiums have also risen for copper, and both aluminium and copper exchange inventories have fallen." Inventories of copper on the LME MCU-STOCKS fell 725 tonnes to 462,725 tonnes, their lowest in more than two months. Stocks of copper on the Shanghai Futures Exchange SCF-TOTAL-W have also fallen in the past few months to close to 20,000 tonnes from more than 80,000 tonnes in mid-February. Stocks of aluminium on the LME MAL-STOCKS also fell, to 4.48 million tonnes, their lowest in more than five months. Aluminium , used in transport and packaging, untraded in rings, was bid at $2,489 a tonne from $2,503. "People think this is the right value for aluminium, and there is not much funds buying," an LME ring trader said, adding that as in the physical market things were also unchanged he did not expect any price pick-up in the next few weeks. Zinc , used in galvanizing steel traded at $2,374 from $2,360 Friday's close. Battery material lead changed hands at $2,668 from $2,674 and tin was at $25,605 from $26,050. Nickel was at $23,100 from $23,000. Metal Prices at 1227 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct move COMEX Cu 430.90 1.25 +0.29 444.70 -3.10 LME Alum 2489.00 -14.00 -0.56 2470.00 0.77 LME Cu 9434.50 -0.50 -0.01 9600.00 -1.72 LME Lead 2667.00 -7.00 -0.26 2550.00 4.59 LME Nickel 23095.00 95.00 +0.41 24750.00 -6.69 LME Tin 25605.00 -445.00 -1.71 26900.00 -4.81 LME Zinc 2374.00 14.00 +0.59 2454.00 -3.26 SHFE Alu 17375.00 110.00 +0.64 16840.00 3.18 SHFE Cu* 70770.00 890.00 +1.27 71850.00 -1.50 SHFE Zin 18100.00 290.00 +1.63 19475.00 -7.06 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Source