METALS-Copper off 13-mth peak on dollar, demand doubts

* China Q3 GDP up 8.9 percent as expected, most metals output up * Dollar recovers from 14-month lows after China data * Zinc jumps to multi-month highs By Maytaal Angel LONDON, Oct 22 (Reuters) - Copper dipped on Thursday as the dollar recovered, investors took profits from the previous sessions' 13-month peaks, and worries that prices had run ahead of fundamentals re-emerged. Benchmark copper on the London Metal Exchange traded at $6,537 a tonne at 0937 GMT from a close of $6,590 on Wednesday. Prices of the metal used in power and construction hit $6,665 on Wednesday, their highest point since late September last year. "There's hell of a lot of good news priced in at these levels. There's no real physical demand for copper ... stocks are up again this morning, this is all driven by speculators ..." said David Thurtell, analyst at Citigroup ( C - news - people ). But he added: "We've lost output from Olympic Dam, the Spence strike goes on. The big macro funds, it's not a concern for them if it (copper) comes off a bit, they can get the shorts out and push prices higher." The dollar rose broadly as a slide in global share prices cooled risk demand. A stronger dollar makes dollar-priced metals more expensive for non-U.S. investors. China's annual economic growth quickened to 8.9 percent in the third quarter, as expected, but refined copper output in the world's largest metals consumer rose to a record 394,800 tonnes in September. Chinese refined production of zinc, nickel and primary aluminium also increased. On the other hand, industrial production, which signals demand, rose to 13.9 percent in September from a year ago. "The data painted a robust picture of demand in China (overall) and taken in conjunction with supply-side issues there's still a very persuasive story in copper, even without signs of recovery in Europe," said Nicholas Snowdown, analyst at Barclays ( BCS - news - people ) Capital. Workers at Chile's Spence copper mine plan to resume wage talks with owner BHP Billiton ( BBL - news - people ) to solve a nine-day strike, while workers at Chile's Andina copper mine demanded a five percent wage hike to owner Codelco. Copper prices have more than doubled this year supported by fund flows, economic data signalling recovery, a struggling dollar and record Chinese imports in the first half. But more recently rising inventories on the London Metal Exchange capped price gains as the demand outlook remained cloudy. Latest LME data showed copper stocks rose 1,525 tonnes to total 364,075 tonnes, the highest since mid-May and up more than 40 percent since the middle of July. ZINC JUMPS In other metals, zinc, used to galvanize steel, rose to multi-month highs spurred by supply concerns in No. 2 zinc producer Peru, and prospects for increased demand in China. "Zinc has firmer premiums. Its one of the metals that stands to gain most leverage from fiscal stimulus in China. Investment in infrastructure ... in September was a key source of support for galvanised steel," said Snowdown. Three-month LME zinc rose a notch to a new 17-month high of $2,242 a tonne, before easing to $2,206 a tonne versus $2,235 on Wednesday. Among other industrial metals, aluminium was at $1,963 from $1,966, while battery material lead was at $2,405 from $2,445. Tin was flat at $14,450, and steel-making ingredient nickel was at $19,375 from $19,735. Metal Prices at 0940 GMT Metal Last Change Percent Move End 2008 Ytd Percent move COMEX Cu 297.50 -5.15 -1.70 139.50 113.26 LME Alum 1956.00 -10.00 -0.51 1535.00 27.43 LME Cu 6538.00 -52.00 -0.79 3060.00 113.66 LME Lead 2400.00 -45.00 -1.84 999.00 140.24 LME Nickel 19275.00 -460.00 -2.33 11700.00 64.74 LME Tin 14325.00 -125.00 -0.87 10700.00 33.88 LME Zinc 2200.00 -35.00 -1.57 1208.00 82.12 SHFE Alu 14985.00 20.00 +0.13 11540.00 29.85 SHFE Cu* 50460.00 430.00 +0.86 23840.00 111.66 SHFE Zin 16445.00 240.00 +1.48 10120.00 62.50 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by Sue Thomas)