MUMBAI, Oct 6 (Reuters) - India copper futures edged higher on Tuesday, supported by a weak dollar, but gains were capped on rising inventory levels in the London Metal Exchange, underlying concerns about the demand outlook, analysts said. The most-traded November copper contract MCCX9 was 0.28 percent higher at 287.00 rupees per kg at 5:35 p.m., after hitting a high of 288.3 rupees earlier. The dollar fell on a media report, later denied, that Gulf Arab states were in talks to abandon the dollar in oil trade. [USD/] A soft dollar typically lifts dollar-denominated copper by making it cheaper for investors outside the U.S. Stocks in LME warehouses continued to rise, up 1,200 tonnes to 346,425 tonnes. LME copper inventories have climbed since mid-July, reversing a trend of almost constant stock falls earlier this year. "The only supportive factor is a weak dollar. Copper might see 290/291 rupees later," said Praveen Singh, an analyst with Sharekhan Commodities. Copper may trade in the range of 284-291 rupees on Tuesday, said Pranav Mer, an analyst with India Infoline. Copper prices have more than doubled since the start of the year on the back of Chinese stockpiling and hopes of a receding economic recession. But analysts said the outlook is still bearish for the red metal in the short-run as prices have exceeded their fundamentals. "The outlook is negative in the short-term as nothing has changed on fundamental front, demand is weak, inventories are still rising," said Singh. "We may see copper at 250/260 in a month," said Singh. In other base metals, zinc October MZIV9 was 0.56 percent higher at 89.20 rupees per kg, while lead for October delivery MLDV9 was up 0.10 percent at 100.60 rupees per kg.

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