METALS-Copper slides on dlr strength, outlook brighter

* Dollar rebound saps strength in base metals complex * Investor interest in commodities grows * Expected pullback may not be as deep as thought NEW YORK/LONDON, June 12 (Reuters) - A recovery in the U.S. dollar dragged copper values down from this week's eight-month highs on Friday, but analysts expect renewed price strength in the coming week due to solid technical patterns and brighter economic prospects. "We had a little pressure from the dollar and a little profit-taking weakness before the weekend because we have had such a spectacular run-up," said Sterling Smith, vice president with FuturesOne in Chicago. "The technical picture really hasn't broken down too badly with this move today. I think it's just a short-term pull-back more tied to those two factors more than anything else and I think our bull-run most likely will be back continuing on Monday." Copper for July delivery HGN9 on the New York Mercantile Exchange's COMEX division slipped 7.15 cents, or 2.9 percent, to settle at $2.3735 a lb. On Thursday, the benchmark contract rallied to an eight-month peak at $2.4575 a lb. On the London Metal Exchange (LME), copper for three month delivery MCU3 closed down $150 at $5,230 a tonne. The metal used in power and construction has gained more than 70 percent this year and about 10 percent since the start of June on stronger economic data and expectations of higher demand in the future. "Investors are becoming more positive on the macro economic outlook and we are seeing more interest in commodities as a whole," said Gayle Berry, analyst at Barclays Capital. "We may see more of a rally before a pullback ... But increasingly I'm thinking that when the pullback does happen it won't be as deep or as long lasting as we previously thought." Analysts cited Chinese industrial production, up 8.9 percent in May from a year ago, as one reason to be bullish because the country is the world's largest consumer of copper. The dollar rose against the euro after data showed consumer sentiment in the United States improved slightly in June and euro zone industrial production shrank in April. [USD/] [ID:nNYS005143] [ID:nLC172970] A stronger U.S. currency makes commodities priced in dollars more expensive for holders of other currencies. RECOVERY ON TRACK? Falling stocks of copper in LME warehouses have in recent months supported prices. Currently, stocks stand at just above 290,000 tonnes compared with levels around 500,000 in February and March. "Further gains will be much harder in the very short term," said Citigroup analyst David Thurtell. "However, the global recovery seems on track and metals should pick up through the second half of 2009 and (into) 2010." Aluminum MAL3, used in transport and packaging shed $49 toclose at $1,644 a tonne. It has gained about 15 percent this month on expectations of improving demand from China, the world's largest consumer. Potentially stronger demand is reflected in canceled warrants --metal already earmarked for delivery -- on stocks in LME warehouses. Analysts think aluminum from LME warehouses could be heading for Chinese stockpiles. Latest data show canceled warrants at 127,775 tonnes from 45,700 tonnes on May 11, while LME aluminum inventories fell 3,025 tonnes to 4.2 million tonnes, still near record highs. "Aluminum prices may have benefited from improved sentiment towards the global economic outlook and its status as one of the most cheaply priced industrial metals," Deutsche Bank said in a research note. Zinc MZN3 closed at $1,690 a tonne, down $30 from Thursday. Lead MPB3 ended at $1,780 from $1,819, and nickel MNI3 at $15,690 from $15,800 on Thursday. Tin was untraded at the close, but bid at $15,625 a tonne from$15,750. Metal Prices at 1843 GMT Metal Last Change Pct Move End 2008 Ytd Pct move COMEX Cu 236.75 -7.05 -2.89 139.50 69.71 LME Alum 1640.00 -53.00 -3.13 1535.00 6.84 LME Cu 5225.00 -155.00 -2.88 3060.00 70.75 LME Lead 1776.00 -43.00 -2.36 999.00 77.78 LME Nickel 15500.00 -300.00 -1.90 11700.00 32.48 LME Tin 15600.00 -150.00 -0.95 10700.00 45.79 LME Zinc 1673.00 -47.00 -2.73 1208.00 38.49 SHFE Alu 13470.00 0.00 +0.00 11540.00 16.72 SHFE Cu* 41180.00 -310.00 -0.75 23840.00 72.73 SHFE Zin 13730.00 110.00 +0.81 10120.00 35.67 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07