MARKETS-METALS/ (UPDATE 4) * Copper, aluminium jump on fragile dollar * Expectations of Q4 demand pickup fuel gains * COMING UP: Weekly U.S. jobless claims at 1230 GMT (Updates official prices, adds detail/comment) By Melanie Burton and Michael Taylor LONDON, Sept 23 (Reuters) - Base metals scaled multi-month peaks on Thursday, underpinned by positive demand expectations towards the year end, while investors eyed a flurry of U.S. data for further direction later in the session. Benchmark copper on The London Metal Exchange was traded at $7,883 in LME rings, up from Wednesday's close of $7,840 per tonne. Used in power and construction, the red metal earlier hit a new five-month high at $7,906.25 per tonne. Three-month aluminium pushed above $2,275 a tonne for the first time since April, while zinc hit $2,244.50, its highest level since the start of May. "Certainly people typically come back from the summer holidays and demand picks up," said RBS head of commodity research Nick Moore. "The move that we've seen since September has been more to do more with people positioning themselves ahead of LME week ... which suggests we could see a quieter end of the year." The dollar steadied after sharp selling the previous day when the U.S. Federal Reserve hinted at more easing, pushing Treasury yields down and keeping the greenback pinned near a five-month low on the euro. A weaker dollar makes industrial metals cheaper for holders of other currencies. Foreign exchange markets could exert fresh pressure on metals later this session, with volumes drained by holidays in Asia. China, Japan, Hong Kong and South Korea are closed for holidays this session. On the LME volumes were very low with under 4,000 lots of copper having changed hands on LME Select. Later this session, weekly U.S. jobless claims are due at 1230 GMT, while existing home sales for August and U.S. leading indicators for August are pegged for 1400 GMT. European equities fell, extending their decline for a third day, as fresh euro zone data added to existing worries about the strength of the global economic recovery. The pace of growth in the euro zone's services and manufacturing sectors slowed much more than expected this month. While lower industrial demand from a major consumer of base metals does not bode well for physical demand, commodities in recent years have grown in popularity as an investment asset. Commodity assets under management fell by $3 billion from a record last month probably represents a more active approach to managing risk as institutions become more sophisticated in their commodity trading, said Barclays Capital in a note. "The picture has improved markedly so far in September. Macroeconomic pessimism is lessening after stronger-than-expected European growth, better US data and signs that the policy-induced slowdown in China may be bottoming," it added. COPPER STOCKS RESUME FALLL Stocks of copper at LME-registered warehouses resumed their decline today, the latest LME data showed. Copper inventories fell by 1,975 tonnes to 380,125 tonnes and remain close to their lowest since last November. Inventories have now fallen by one third since mid February, when they stood at 555,075 tonnes, the highest level since October 2003. As well, the global market deficit for refined copper widened in the first half to 281,000 tonnes from 125,000 tonnes the year before, the International Copper Study Group said this week. Inventories fell across four of the six major contracts today, highlighting a pick up in demand post summer, however the recent price rise, given the absence of Chinese consumers, could be overdone, analysts said. "Although better fundamental data recently justified a rise in copper prices, this was exaggerated in our view and correction potential has thus resulted," Commerzbank said in a research note. Across other metals, aluminium traded at $2,266.50 a tonne in LME rings versus $2,235, zinc at $2,235.50, against a close of $2,192 per tonne, and lead at $2,245 versus $2,223.50. Nickel pared gains and was untraded in exchange rings, but last bid at $22,675 in exchange rings from $22,560. Used in stainless steel, the metal reached a 4-1/2-month peak of $23,570 last week. LME nickel inventories rose by 468 tonnes according to LME data today. Tin meanwhile was untraded but last bid at $23,630 in LME rings from $23,300 at Wednesday's close. Metal Prices at 1225 GMT Metal Last Change Percent Move End 2009 Ytd Percent move #VALUE! LME Alum 2256.00 21.00 +0.94 2230.00 1.17 LME Cu 7844.00 4.00 +0.05 7375.00 6.36 LME Lead 2234.00 10.50 +0.47 2432.00 -8.14 LME Nickel 22500.00 -60.00 -0.27 18525.00 21.46 LME Tin 23400.00 100.00 +0.43 16950.00 38.05 LME Zinc 2224.00 32.00 +1.46 2560.00 -13.13 SHFE Alu 15725.00 -35.00 -0.22 17160.00 -8.36 SHFE Cu* 59830.00 -420.00 -0.70 59900.00 -0.12 SHFE Zin 17805.00 -300.00 -1.66 21195.00 -15.99 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Source