* Fresh slew of U.S. earnings eyed * Copper, tin in backwardation By Rebekah Curtis LONDON, July 17 (Reuters) - Copper dipped on Friday as the dollar rose, while a rise in inventories reminded investors that a demand recovery is far from certain, tempering the market's growing confidence in the prospect of economic improvement. Copper for three-months delivery on the London Metal Exchange traded at $5,213.75 a tonne at 0917 GMT from a close of on $5,260 on Thursday. Copper's weakness in the past two sessions follows a series of rallies in recent days sparked by upbeat economic and corporate data. The metal used in power and construction is nearly 7 percent higher so far this week. "A lot of the drive we saw earlier in the week was a lot of short-covering going on," said David Wilson, director of metals research at Societe Generale. "Some sort of correction should be seen either today or next week. It is very much up-and-down and quite volatile." A stronger dollar weighed on copper, making dollar-priced metals more expensive for holders of other currencies. Keeping demand concerns alive, copper stocks at LME warehouses rose 3,275 tonnes to 264,150 tonnes. Despite the dip in prices, some investors were nonetheless concerned over tightness in the copper market as latest data showed a dominant position controlling between 50 percent and 80 percent of LME stocks. Analysts said this was partly behind copper moving into backwardation -- a premium of about $7/$14 for LME cash copper over the three-month contract. This compares to a contango of $14.50 on July 8. Investors will eye Bank of America and Citigroup for a fresh dose of U.S. earnings optimism on Friday, after strong reports from JPMorgan Chase and IBM. RECORD STOCKS, AGAIN... Aluminium, used in transport and packaging, was at $1,693 from $1,690. Cancelled warrants -- material tagged for delivery -- rose to 152,500 tonnes from 138,100 tonnes. But stocks of the metal, beleaguered by demand being crushed in the economic downturn, rose 700 tonnes to a record high above 4.5 million tonnes. Zinc was at $1,540 from $1,549, battery material lead was at $1,625 from $1,620. Nickel was at $16,000 from $16,100. Tin was at $13,000 from $13,025. Worries about nearby supplies of tin have pushed the premium for cash material over the three-month contract to $113 a tonne from a discount of around $40 a tonne mid-June. Traders also remain concerned about the scale of long positions in the tin market, compared with the amount of available metal in LME warehouses. "There is little doubt that China's demand for copper and other metals will remain robust when the fourth quarter comes and especially as we go into 2010," VTB Capital said in a note. Data earlier this week showed the Chinese economy grew a stronger-than-forecast 7.9 percent in the second quarter, reinforcing hopes the world economy is slowly hauling itself out of the downturn. "By the looks of it, the (Chinese) government's target of 8 percent for 2009 now looks incredibly achievable as internal consumption and infrastructure investments continue to drive growth," VTB Capital said in the note. For latest Reuters polls of industrial metals price forecasts, click on or Metal Prices at 0923 GMT Metal Last Change Percent Move End 2008 Ytd Percent move COMEX Cu 238.10 0.10 +0.04 139.50 70.68 LME Alum 1690.00 35.00 +2.11 1535.00 10.10 LME Cu 5205.00 -55.00 -1.05 3060.00 70.10 LME Lead 1620.00 0.00 +0.00 999.00 62.16 LME Nickel 15975.00 -125.00 -0.78 11700.00 36.54 LME Tin 12925.00 625.00 +5.08 10700.00 20.79 LME Zinc 1535.00 -7.00 -0.45 1208.00 27.07 SHFE Alu 13645.00 130.00 +0.96 11540.00 18.24 SHFE Cu* 41750.00 210.00 +0.51 23840.00 75.13 SHFE Zin 13420.00 180.00 +1.36 10120.00 32.61 ** 1st contract 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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