METALS-Copper's rally stalls as investors assess economics

* Fundamentals do not justify price gains

* Aluminum, nickel fall 5 percent

* Tin market focus on dominant position

(Recasts, updates with New York closing copper prices, adds NEW
YORK to dateline and analyst comments)

By Chris Kelly and Martina Fuchs

NEW YORK/LONDON, Aug 6 (Reuters) - Copper settled down for the
first time in six sessions on Thursday, as investors paused to
assess whether recent gains were justified and sided with caution
ahead of a much anticipated U.S. employment data on Friday.

"We have come a long way, and it was time to take some money off
the table and assess things," said Frank Lesh, broker and futures
analyst with Future Path Trading in Chicago. "There's also a little
bit of caution ahead of the employment data tomorrow."

Friday's nonfarm payrolls data are expected to show a slower
pace of contraction in the U.S. labor market. [ID:nN05247775]

Copper for September delivery HGU9 on the New York Mercantile
Exchange's COMEX division fell 6.00 cents to end at $2.7520 a lb,
pulling further back from Wednesday's climb to $2.8385 -- the
highest level since early October.

On the London Metal Exchange (LME), three-month copper MCU3
closed at $6,025 a tonne, compared with a closing bid at $6,199 on
Wednesday when it hit a 10-month high of $6,235.

"There has been a lot of speculative interest in base metals.
Copper hasn't paused in the last six days, a tremendous run," said
Justin Lennon, analyst at Mitsui Bussan Commodities.

"I see supplies becoming a little more available, because
everyone says China is probably going to take a little buying break
in the third quarter."

The metal used in power and construction is up about 50 percent
since the start of April when markets started to believe an economic
recovery, albeit fragile, could happen sooner than thought.

This week's copper gains -- about 7 percent -- were triggered by
manufacturing data from the China and the United States, the world's
top two copper consumers. [ID:nL3653303]

"All the metals have gone way beyond the fundamentals," said
Stephen Briggs, analyst at RBS Global Banking & Markets. "There's
ample scope for disappointment on economic data ... good
fundamentals are a long way in the future."

DOMINANT POSITIONS

Supporting sentiment was news that auto makers Japan's Toyota
Motor Corp (7203.T) and Germany's BMW (BMWG.DE) both beat forecasts
with quarterly results, which were boosted by government schemes to
scrap old cars for new. [TOPWRAP]

Still, aluminum MAL3 slid more than 5 percent to $1,951.25 a
tonne at one point before ending at $1,990 a tonne, down $80 from
the close on Wednesday.

Tin MSN3 closed at $14,700 a tonne, after touching a
seven-week high of 15,400 earlier in the day. Focus was on a large
position holder, which has bought tin for delivery in September and
sold it for December. [ID:nL7149027]

Worries that those who sold to the entity will be caught short
of the metal pushed the premium for the September contract over the
December contract to $1,500 a tonne on Friday.

The spread traded at $1,000 a tonne on Tuesday and was valued at
$960 at the close on Wednesday.

Stainless steel ingredient nickel MNI3 ended at $19,600 a
tonne, down from an 11-month high of $20,450 hit on Wednesday.

Prices have slipped, but market talk that Brazil's Vale Inco
(VALE5.SA) has declared force majeure at its Sudbury nickel
operations in Canada, Ontario, will help bolster sentiment.

Sudbury produces about 85,000 tonnes of nickel a year -- about 7
percent of global annual consumption estimated by some at above 1
million tonnes this year.

Unionized workers at Sudbury have been on strike since July 13.
Some worker's at Vale's Voisey's Bay mine, which produced 77,500
tonnes last year, went on strike on Aug. 1.

"Last year, the two nickel mines made up of about 11 percent of
global nickel production," Commerzbank said in a note. "Even though
these strikes will contribute to a tightening ... they do not
justify the current price increase."

Nickel prices have doubled since early April.

Battery material lead MPB3 closed at $1,855 a tonne compared
with $1,891 at on Wednesday, and zinc MZN3, used for galvanizing
steel, at $1,846 from $1,920.
Metal Prices at 1852 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 274.60 -6.05 -2.16 139.50 96.85
LME Alum 1985.00 -85.00 -4.11 1535.00 29.32
LME Cu 6055.00 5.00 +0.08 3060.00 97.88
LME Lead 1870.00 -75.00 -3.86 999.00 87.19
LME Nickel 19469.00 -981.00 -4.80 11700.00 66.40
LME Tin 14650.00 -650.00 -4.25 10700.00 36.92
LME Zinc 1859.75 -60.25 -3.14 1208.00 53.95
SHFE Alu 15290.00 90.00 +0.59 11540.00 32.50
SHFE Cu* 47950.00 -140.00 -0.29 23840.00 101.13
SHFE Zin 15210.00 15.00 +0.10 10120.00 50.30
** 1st contract month for COMEX copper * 3rd contract month for
SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Pratima Desai in London; Editing by
William Hardy/Marguerita Choy)