By Rujun Shen and Jacqueline Wong SHANGHAI (Reuters) - Copper prices were steady on Tuesday, underpinned by weakness in the U.S. dollar, but Shanghai copper edged lower, as growing inventories have increasingly become a major concern for investors. The U.S. dollar hovered above a 15-month low against a basket of six major currencies, while the euro and higher-yielding currencies revisited recent highs, supporting metals prices. But some analysts said the support from the weak dollar was abating, while concern over the rising stocks was growing. "The U.S. dollar fell overnight, but we didn't see LME prices respond actively. Unless the dollar tumbled more than expected, it would not give much of a boost to metals," said Zhu Yanzhong, an analyst at Jinrui Futures. "The focus now is shifting to the high inventories." LME copper stocks continued their ascent on Monday, climbing by 3,900 tonnes to 389,475 tonnes, the highest since early May. Copper inventories in Shanghai rose to their highest in five-and-a-half years last week. Three-month copper futures on the London Metal Exchange rose $25 to $6,565 a tonne by 0222 GMT, building on a $50 gain in the previous session. Shanghai's benchmark third-month copper futures contract fell 0.3 percent to 51,150 yuan a tonne. The most-active contract for February delivery edged down 0.3 percent to 51,310 yuan a tonne. "Prices have been moving in very narrow ranges in the past few days, largely as the short-term speculative money has left the market," said Li Rong, an analyst at Great Wall Futures. "Looking forward investors are mostly bullish, but they are not sure when the rally should take off." China is expected to release October imports data for unwrought copper and semi-finished copper products, as well as copper output data, later in the week, both of which will be closely watched by the market. "If October copper imports were as high as September, it would be bullish news for the market. If they fell as expected, it wouldn't have much impact," said Zhu of Jinrui Futures. LME aluminium edged down 0.6 percent to $1,940 a tonne, after hitting $1,952, their highest in more than a week in the previous session. Shanghai aluminium was flat at 15,185 yuan a tonne. "There are still a lot of shorts in aluminium. Those are being closed out. I think we'll see aluminium outperform the rest of the sector," said a Singapore-based trader, adding that the overall base metals market lacked directions. Aluminium prices should remain weak into 2010, with smelters expected to restart some idled production capacity despite a surplus already overhanging the global market, a Bank of America Merrill Lynch research note said.

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