MARKETS-METALS (UPDATE 4) * Worries remain on China tightening, economic recovery * Falls in inventories support prices but dollar firm * Non-farm payrolls top pick on busy macro calendar (Updates official prices, adds detail) By Michael Taylor LONDON, Feb 4 (Reuters) - Copper was flat on Thursday as a firm dollar, concerns about economic recovery and demand from top consumer China balanced falls in inventory levels. Benchmark copper for three-month delivery on the London Metal Exchange was unchanged at $6,590 a tonne from Wednesday's close. Copper, used in power and construction, earlier rose to $6,680 before easing to a session low at $6,540 -- close to the two-and-a-half month low of $6,525 hit on Wednesday. "The major factor which is now dragging prices lower, is the dollar," said Eugen Weinberg, an analyst at Commerzbank. "After the recent sell-off, copper prices down about $200, it was important for the markets to stabilize today, and they only failed due to the stronger dollar." On Thursday, the greenback remained firm after climbing broadly the day before on improving U.S. jobs and industry data, as fears about debt levels in Portugal, Spain and Greece helped lift the dollar against the euro. A firmer U.S. currency makes metals priced in dollars more expensive for holders of other currencies. On Wednesday, LME copper volumes spiked to 23,768 lots compared with 14,997 in the previous session. Analysts said this highlighted the uncertainty in the market, as long positions minimized potential losses and bears built up short positions. Traders will eye U.S. productivity and jobs data on Thursday, and U.S. non-farm payroll numbers on Friday. CHINA CRUCIAL In addition to a weaker dollar and improving economic outlook, Chinese demand for industrial metals helped copper rise 140 percent last year. But the red metal has tumbled about 15 percent in the previous three weeks on renewed fears that China's efforts to restrict bank lending and head off inflation could snuff out demand. "The recent change in sentiment was probably triggered by concerns over monetary tightening in China," said Daniel Major, an analyst at RBS Global Banking & Markets. "They haven't actually done a great deal yet ... there is plenty of scope for surprises out of China in the next 12 months, as they try and drain the liquidity they've pumped in." "(But) there is less likely to be any source of information coming out of China over the New Year period that might rock the boat -- such as any more signs of policy tightening," he added. But such worries about a Chinese slowdown in demand may be overplayed by commodity traders, many analysts say. Chinese copper product makers expect demand to rise after the Lunar New Year holidays, despite Beijing's moves to soak up liquidity. Supporting prices, are LME copper stocks which have fallen in recent days, offering hope that demand outside China may be improving. The latest data showed stocks fell 1,050 tonnes to total 539,425. Stocks in aluminium, used in transport and packaging, eased 6,050 tonnes but remain at record levels just below 4.6 million tonnes. Aluminium prices traded at $2,078 in LME rings versus $2,083. Steel making ingredient nickel traded at $18,350 from $18,195 while battery material lead was at $2,012 in LME rings from $2,020. Zinc was untraded in LME rings but last bid at $2,095 a tonne from $2,095 and tin was traded at $16,640 from $16,600. Metal Prices at 1310 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 296.35 -0.45 -0.15 332.75 -10.94 LME Alum 2070.00 -13.00 -0.62 2230.00 -7.17 LME Cu 6565.00 -25.00 -0.38 7375.00 -10.98 LME Lead 2005.00 -15.00 -0.74 2432.00 -17.56 LME Nickel 18330.00 30.00 +0.16 18525.00 -1.05 LME Tin 16550.00 -50.00 -0.30 16950.00 -2.36 LME Zinc 2086.00 -9.00 -0.43 2560.00 -18.52 SHFE Alu 16350.00 -210.00 -1.27 17160.00 -4.72 SHFE Cu* 54020.00 -1800.00 -3.22 59900.00 -9.82 SHFE Zin 17500.00 -485.00 -2.70 21195.00 -17.43 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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