MARKETS-METALS (UPDATE 4) * Market talks about targeted stimulus * Aluminium hits highest since Jan 27 * Stainless ingredient nickel finds favour (Releads, adds official prices/comment) By Pratima Desai LONDON, Feb 23 (Reuters) - Copper slipped on Tuesday as the dollar recovered early losses, but expectations of further government stimulus packages to boost the construction and auto sectors helped support prices. Benchmark copper on the London Metal Exchange traded at $7,260 a tonne in official rings from $7,330 at the close on Monday. The metal used in power and construction has gained about 18 percent since Feb. 5. The dollar firmed, making metals more expensive for holders of other currencies, ahead of testimony from U.S. Federal Reserve Chairman Ben Bernanke on monetary policy and the state of the economy on Wednesday and Thursday. Major economies such as the United States, Japan and Germany show few signs of robust, sustainable growth and analysts are talking about further stimulus packages. "It is likely that some further stimulus will be applied, principally to sectors like construction and autos," said John Meyer, analyst at investment bank Fairfax. "The construction industry is suffering badly....auto stimulus will be a political potato, it's about keeping consumers happy while keeping those factories going." Aluminium is a crucial material for the auto industry. The metal rose to $2,179 a tonne, the highest since Jan. 27, partly because of cancelled warrants -- material earmarked for delivery -- to around 300,000 tonnes from about 215,000 in early January. It traded at an unchanged $2,150 tonnes. Cancelled warrants account for more than 6 percent of total LME stocks, which stand at 4.58 million tonnes. A significant proportion of aluminium stocks are also tied up in financing deals to release cash for producers. PLAY ON CHINA China is the world's largest producer and consumer of aluminium. It is also the world's largest consumer of copper, accounting for more than 30 percent of demand. "Many investment funds also see base metals as a play on China, and on the recovery in global economic activity," Natixis said in a note. "Although it is difficult to double guess the funds, many of the factors that attracted investors to the base metal sector are still in place." However, data from Barclays on Monday showed that investments in commodities fell to $245 billion in January from $257 billion in December. It was the first fall since November 2008. Analysts say a major reason behind the fall was concern about policy tightening in China, where the central bank has raised banks' required reserves, effective from Thursday. Zinc traded at $2,246 a tonne from $2,290 on Monday, battery material lead at $2,310 a tonne from $2,325, tin at $17,050 from $17,175 and stainless ingredient nickel at $20,455 from $20,475. Nickel saw a peak of $20,734 a tonne, its highest since Aug. 14. Gains have partly been built on falling LME stocks, down more than 5,200 tonnes since Feb. 5 to 161,178 tonnes. "People are talking about stronger demand growth and a lower nickel market surplus," a London-based trader said. Stainless steel mills are estimated to use two-thirds of global nickel consumption, estimated this year at about 1.4 million tonnes. A recent Reuters survey showed the nickel market surplus at 15,000 tonnes this year. Metal Prices at 1311 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 327.50 -3.15 -0.95 332.75 -1.58 LME Alum 2144.00 -6.00 -0.28 2230.00 -3.86 LME Cu 7270.00 -60.00 -0.82 7375.00 -1.42 LME Lead 2303.00 -22.00 -0.95 2432.00 -5.30 LME Nickel 20450.00 -25.00 -0.12 18525.00 10.39 LME Tin 17025.00 -150.00 -0.87 16950.00 0.44 LME Zinc 2247.00 -43.00 -1.88 2560.00 -12.23 SHFE Alu 17015.00 35.00 +0.21 17160.00 -0.84 SHFE Cu* 58890.00 -120.00 -0.20 59900.00 -1.69 SHFE Zin 18775.00 -65.00 -0.35 21195.00 -11.42 ** 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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