* Copper inventories fall in Shanghai * Lead fundamentals better than zinc's-analysts * Coming up: Chicago PMI; 1355 GMT By Silvia Antonioli LONDON, March 30 (Reuters) - Copper firmed slightly on Friday and was on track for an 11 percent gain in the first quarter of the year, supported by a weaker dollar and falling metal inventories in Asia, although fears persisted of weak demand in top consumer China. Benchmark copper on the London Metal Exchange (LME) rose almost 1 percent to trade at $8,437 by 0947 GMT, from $8,350 at the close on Thursday. The red metal used in power and construction rallied in January and hit a five-month high at $8,765 in February but the bull run lost some steam because of slowing economic growth in China, which consumes 40 percent of the global copper supply. Copper has been trading in a $8,100-8,800 range in the last few weeks as conflicting signals have been puzzling investors. "Although you do have a market very worried about Chinese demand, metals have been performing surprisingly well," said Barclays Capital analyst Gayle Berry. "I think we will see more range trading for copper unless something convincing sparks a change." Partially offsetting worries about slowing economic growth in China is data from the U.S. in the last few weeks which has pointed to a recovery in the world's largest economy. Job data on Thursday, for example, showed ongoing healing in the U.S. labor market. The dollar hit a one-month low against a basket of currencies, extending losses from earlier in the week following dovish comments on U.S. monetary policy and softer economic data. A weaker U.S. unit makes dollar-priced commodities such as metals cheaper for holders of other currencies. LEAD RECOVERS Underpinning the red metal prices, inventories of copper in warehouses monitored by the London Metal Exchange have been sliding in the last six months, signalling improving demand for the metal. After a 2 1/2 month run up, inventories of copper in warehouses monitored by the Shanghai Futures Exchange have also started to decline in the last two weeks. "Currently, we would argue that the environment for metals is not so weak. Leading indicators suggest that growth is stabilizing and inventories are falling for most metals. This is providing some support," Credit Suisse said in a note. "However, the expectation for more weakness ahead is weighing on sentiment. Hence, the release of the Chinese PMI over the weekend will be a key event risk for the near-term direction." In other metals, prices of zinc surpassed lead this month for the first time since September 2011, reversing their traditional relationship. The two metals are currently trading at similar levels but analysts see fundamentals pushing lead prices ahead once again. "We see lead prices increasing. It has been suffering from short-selling but I think there is quite a lot of upside potential, particularly because of supply side support," Berry said. Doe Run declared force majeure on lead output from the United States' sole primary producer in Herculaneum, Missouri, following a fire last week which will stop production for up to six weeks. Three-month lead was at $2,024 from $1,995 while zinc < CMZN3> was at $2,008.25 from $2,005. Nickel traded at $17,559 from $17,150. The stainless steel ingredient was potentially the biggest loser among the base metals this quarter, with a 6 percent value decline. "With nickel you are reaching the price level where some production might be rationalized," Berry said. Tin was at $23,200 from $22,700 while aluminium was at $2,147 from $2,135. Metal Prices at 1059 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 383.00 3.35 +0.88 334.65 14.45 LME Alum 2133.00 -2.00 -0.09 2230.00 -4.35 LME Cu 8349.00 -1.00 -0.01 7375.00 13.21 LME Lead 1994.00 -1.00 -0.05 2432.00 -18.01 LME Nickel 17150.00 0.00 +0.00 18525.00 -7.42 LME Tin 22700.00 0.00 +0.00 16950.00 33.92 LME Zinc 2005.00 0.00 +0.00 2560.00 -21.68 SHFE Alu 16165.00 -5.00 -0.03 17160.00 -5.80 SHFE Cu* 60010.00 270.00 +0.45 59900.00 0.18 SHFE Zin 15445.00 105.00 +0.68 21195.00 -27.13 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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