* China housing inflation could be bearish for copper -ANZ * Aluminium inventories in LME warehouses rise to record high * Coming up: U.S. building permits for Oct at 1330 GMT By Andrew Heavens and Susan Thomas LONDON, Nov 20 (Reuters) - Copper fell on Tuesday after a downgrade of France's credit rating reminded investors of the festering euro zone debt crisis and took the steam out of a Monday rally built on optimism over positive announcements from Europe and the United States. Prices for the industrial metal used widely in construction and power followed shares lower after Moody's issued an expected downgrade of France's credit rating, citing an uncertain fiscal outlook in the euro zone's second biggest economy. "This is exactly the kind of thing we can expect to see over the coming quarters - a few headlines of good news that are then reversed by ongoing problems, particularly in Europe and the US," said Barclays analyst Gayle Berry. "I think that until those (growth concerns) are tackled at the core  then prices are always going to be vulnerable to the ebb and flow of headlines," she added. Three-month copper on the London Metal Exchange had slipped 0.5 percent to $7,761 a tonne by 1103 GMT. Still, the metal has risen around 2 percent so far this year. It closed at $7,803 on Monday after rising to its highest since Nov. 2, helped by reports showing U.S. home sales rose last month and a gauge of home builder sentiment climbed to a six-year high in November. Construction is a significant market for copper with a little over 400lbs of copper used in a typical U.S. home. In China, home prices rose 0.05 percent in October from September, according to calculations based on official data this week, adding to evidence of a recent, mild recovery in the country's property market and frustrating the government's efforts to temper prices. Signs that housing inflation is not easing in China, the world's biggest copper consumer, could erode support for copper, ANZ Research said in a note. "With a focus on housing inflation, the latest data could prompt the government to refrain from relaxing curbs on the property market - bearish for copper," ANZ said. "Markets are closely watching for any policy direction from the new leadership and will likely direct sentiment for base metals," ANZ added. Berry saw the base metals market remaining largely range-bound in the near term. "For those metals like aluminium where the fundamentals are bearish...that has already been priced into the market to an extent. For other metals where things are a bit tighter, like lead and copper, those prices are holding up relatively OK," she said. "I don't think you're going to see any brave trades being put on before the end of the year," she added. Inventories of aluminium rose to an all-time high of 5.17 million tonnes, data showed on Tuesday, in a market with a structural surplus. While demand for aluminium has been hit by the global financial crisis, producers have kept churning out metal, especially in China, the world's biggest producer. Three-month aluminium was almost flat at $1,978 per tonne from $1,977 at the close on Monday. The price has shed 10 percent since mid-September and has lost 42 percent since touching a peak of $3,380 a tonne in July 2008. Investors are watching for U.S. housing starts data later on Tuesday and the outcome of a euro zone finance ministers meeting in Brussels that is expected to give a tentative go-ahead to release 44 billion euros ($56 billion) in emergency loans to Greece. Finland's finance minister, Jutta Urpilainen, introduced a note of uncertainty on Tuesday, saying she was unsure whether the ministers would approve the next loan tranche at the meeting. But the euro held steady against the dollar on cautious optimism that the ministers will release the funds to Greece. A stronger dollar often encourages non-U.S. holders of metal to sell to lock in a higher profit in their own currencies. Three-month tin was at $20,800 from $20,780 at the close on Monday, while zinc was at $1,945 from $1,937. Three-month lead was at $2,191 from $2,180 and nickel was at $16,425 from $16,418. Metal Prices at 1112 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2011 Ytd Pct move COMEX Cu 351.75 -1.00 -0.28 344.75 2.03 LME Alum 1974.50 -2.50 -0.13 2020.00 -2.25 LME Cu 7757.25 -45.75 -0.59 7600.00 2.07 LME Lead 2177.25 -13.75 -0.63 2034.00 7.04 LME Nickel 16411.00 -14.00 -0.09 18650.00 -12.01 LME Tin 20760.00 -40.00 -0.19 19200.00 8.13 LME Zinc 1937.50 -8.00 -0.41 1845.00 5.01 SHFE Alu 15360.00 -30.00 -0.19 15845.00 -3.06 SHFE Cu* 56340.00 290.00 +0.52 55360.00 1.77 SHFE Zin 15000.00 -45.00 -0.30 14795.00 1.39 ** 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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