* HIgh copper stocks worry Chilean mining minister
(Recasts, previous Singapore)
By Rebekah Curtis
LONDON, Feb 17 (Reuters) - Copper rose to a three-week high on Wednesday as upbeat economic data in the United states and Asia, and rising amounts of material tagged to leave warehouses, bolstered the demand outlook.
Copper for three-months delivery MCU3 on the London Metal Exchange traded at $7,158 a tonne at 1059 GMT from a close of $7,144 on Tuesday.
The metal used in power and construction extended a rally from the day before and hit an intraday high of $7,240, its highest since Jan. 27.
Sentiment improved after data the day before showed manufacturing in New York state rose in February. And data on Monday showed Japan's economy grew faster than expected in the fourth quarter, helped by economic stimulus.[ID:nNLLGDE60D] [ID:nTOE61805L]
"Confidence has been regained," said Alex Heath, head of base metals at RBC Capital Markets.
"There are positive parts of the globe that are showing signs of responding to the massive injections of capital. In the U.S. the data by and large is fairly positive."
But a rising dollar capped gains, by making dollar-priced commodities costlier for non-U.S. investors. [FRX/]
CANCELLED WARRANTS
Investors are keeping an eye on rising cancelled warrants -- material tagged for delivery -- at LME warehouses.
Cancelled warrants of copper were at 16,900 tonnes, up 500 tonnes from the day before and have more than doubled from a level of 7,425 tonnes at the end of January.
But these cancelled warrants account for just 3 percent of total stocks, which are at 549,900 tonnes, their highest since October 2003.
For a graphic of the ratio of cancelled copper warrants to total stocks, click: here
"Cancelled warrants are providing a little bit of comfort," Heath said.
"The markets have got so used to stocks build-ups over the last year that any trend reversing that will be taken as a sign that the economy is on the mend."
Chilean Mining Minister Santiago Gonzalez raised worries about high international copper inventories -- currently enough for around 10 days of world consumption -- and their negative implications on prices. [ID:nN16228653]
"Disproportional stocks on metal exchanges could trigger a significant fall in prices," Gonzalez told reporters, saying that miners, including state giant Codelco [CODEL.UL], the world's top producer, needed to cut costs to cope with any eventual price fall.
Aluminium MAL3 traded at $2,115 a tonne from $2,131.
Stocks of aluminium jumped 22,750 tonnes to above 4.6 million tonnes, hovering just below record highs.
Cancelled aluminium warrants are at 293,175 tonnes, up some 20 percent so far this month from 242,275 at the end of January but still a mere fraction of total inventories.
Analysts estimate around 75 percent for the almost 4.6 million tonnes of metal in LME storage is locked up in deals, leaving around 1.15 million tonnes potentially available.
"The risk of an aggressive acceleration in the unwinding of these deals appears to be low," Morgan Stanley said in a note.
But the note added that any acceleration in the rate of back-end selling and even a modest rise in key interest rates could quickly change the current price/yield equilibrium and the market's perceptions of where aluminium prices are heading.
"As a result of these risks and uncertainties, we continue to prefer investment exposure to the aluminium market via alumina rather than primary metal."
The LME said it will postpone the launch of its LMEsword warranting system until April 12, to allow members and warehouse agents more time to get to know the system. [ID:nN16486405]
Zinc MZN3 was at $2,312 from $2,337. Stocks of zinc jumped 39,900 tonnes, as a previously deferred shipment arrived.
Lead MPB3 was at $2,310 from $2,298. The battery material earlier hit a one-month high of $2,360. Tin MSN3 traded at $16,699 from $16,700 and nickel MNI3 was at $20,190 from $20,325 having earlier hit $20,589, its second six-month high in two sessions.
Metal Prices at 1103 GMT Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 321.85 0.00 +0.00 332.75 -3.28 LME Alum 2111.00 -20.00 -0.94 2230.00 -5.34 LME Cu 7159.00 15.00 +0.21 7375.00 -2.93 LME Lead 2305.00 7.00 +0.30 2432.00 -5.22 LME Nickel 20075.00 -250.00 -1.23 18525.00 8.37 LME Tin 16675.00 180.00 +1.09 16950.00 -1.62 LME Zinc 2307.00 -30.00 -1.28 2560.00 -9.88 SHFE Alu 16825.00 185.00 +1.11 17160.00 -1.95 SHFE Cu* 56410.00 1020.00 +1.84 59900.00 -5.83 SHFE Zin 18345.00 270.00 +1.49 21195.00 -13.45 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
