MARKETS-METALS (UPDATE 5):METALS-Copper hits 2-week high on weak dollar, Alcoa * Dollar slumps as risk appetite rises * BHP disaster could cut 50,000 t copper supply - Macquarie By Rebekah Curtis and Maytaal Angel Rate This Story Your Rating Overall Rating Reader Comments Comment On This Story LONDON, Oct 8 (Reuters) - Copper rose to a two-week high on Thursday as a weaker dollar attracted investors, while strong earnings from Alcoa boosted aluminium and renewed bets for an economic recovery. Copper for three-months delivery on the London Metal Exchange rose to $6,260.25 a tonne from a close of $6,095 on Wednesday. Earlier the red metal hit $6,305, its best level since Sept. 22. "The market was surprised by Alcoa's results but if you want a clear statement look to the dollar... it's terribly weak and everything is responding accordingly," said Gary Mead, senior commodities analyst at Virtual Metals. He added while supply-side issues mean copper is the best bet in the metals space long term, worries that stubbornly high unemployment will hurt a fledgling economic recovery are capping gains nearer term. U.S. data released earlier helped ease some of these worries. The number of U.S. workers filing new claims for jobless insurance fell to a nine month low last week. The dollar, perceived as a safe haven, fell broadly as rising equity markets fuelled demand for riskier assets. A weak dollar makes dollar-priced metals cheaper for non-U.S. investors. Aluminium rose to $1,886 from $1,845, after Alcoa Inc, the largest U.S. aluminium producer, reported a surprise third quarter profit and forecast global consumption will rise 11 percent in the second half. "Alcoa's results today for the third quarter were positive," said ING ( ING - news - people ) analyst Nick Hatch. "That's added fuel to today's fire." Elsewhere, supply fears were also boosting sentiment. Macqaurie Bank said earlier this session the world copper market stands to lose 50,000 tonnes of supply this year and tip back into deficit after a mechanical failure at Australia's giant Olympic Dam mine cut production capacity by 80 percent. NERVES LINGER Prices of copper, used in power and construction, have doubled in value this year on the back of improved macro-economic data and restocking by China, the world's top consumer of the metal. But investors are still nervous about the demand picture as the outlook for global economic recovery remains uncertain, Chinese buying wanes and OECD consumption struggles to pick up. Traders are gearing up for the return of Chinese markets on Friday after week-long National Day celebrations, and for the start of LME week on Monday, which will likely set the tone for the metals market outlook for next year. Among other industrial metals, zinc was at $2,003 from $1,935. It touched a one-month high of $2,010 earlier. "The closure of Minmetal's Century zinc operation, following a leak in the pipeline transporting concentrate from the mine is continuing to lend support to prices," said Standard Bank in a note. Battery material lead was at $2,230 from $2,155, having earlier touched a one week high of $2,256. Tin was at $14,900 from $14,675 and nickel was at $19,105 from $18,600. Nickel touched $19,500 earlier, its highest since late August. Industry data released on Wednesday showed hedge funds that focus on metals have outperformed other commodity hedge funds this year. Metal Prices at 1426 GMT Metal Last Change Percent Move End 2008 Ytd Percent move COMEX Cu 283.90 6.85 +2.47 139.50 103.51 LME Alum 1884.00 39.00 +2.11 1535.00 22.74 LME Cu 6256.00 161.00 +2.64 3060.00 104.44 LME Lead 2221.00 66.00 +3.06 999.00 122.32 LME Nickel 19100.00 500.00 +2.69 11700.00 63.25 LME Tin 14675.00 0.00 +0.00 10700.00 37.15 LME Zinc 1998.00 63.00 +3.26 1208.00 65.40 SHFE Alu 14835.00 130.00 +0.88 11540.00 28.55 SHFE Cu* 48190.00 1720.00 +3.70 23840.00 102.14 SHFE Zin 15330.00 240.00 +1.59 10120.00 51.48 ** 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 James Jukwey)

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