METALS-US employment data drives copper to firmer finish

* Copper and aluminum seen heading back to 2009 highs

* Nickel market eyes Canada strikes

* Aluminum boosted by U.S. auto sales incentives
(Changes headline, recasts, updates with New York closing copper
prices, adds NEW YORK to dateline and trader comments)

By Chris Kelly and Pratima Desai

NEW YORK/LONDON, Aug 7 (Reuters) - Copper prices reversed
earlier losses and extended gains into the close on Friday, after
stronger-than-expected employment data in the United States
sparked renewed optimism about the economic outlook.

"The numbers are very encouraging," David Thurtell, analyst at
Citigroup, said of data showing U.S. employers cut a far less than
expected 247,000 jobs in July. The data added to a batch of recent
strong data that suggested the U.S. economy was starting to
improve. [ID:nL7370693]

"We are not going to start adding jobs till probably late
first half of 2010, but certainly if we are losing jobs at a much
slower rate, it is indicative of the recession coming to an end,"
said Matthew Zeman, head of trading with LaSalle Futures Group in
Chicago.

Citigroup's Thurtell said the recent bullish momentum could
easily push prices of copper and aluminum back up to their 2009
highs seen earlier this week.

Copper for September delivery HGU9 on the New York
Mercantile Exchange's COMEX division ended up 3.35 cents at
$2.7855 a lb, well within reach of its 10-month high of $2.8385
reached on Wednesday.

On the London Metal Exchange (LME), three-month copper MCU3
rebounded from earlier losses to end up $125 at $6,150 a tonne,
nearing its 10-month high of $6,235.

Prices had earlier fallen after Chinese policymakers said bank
lending in the second half of the year would be weaker than in the
first half.

The metal used in power and construction is up about 50
percent since early April.

"Chinese authorities are shifting the emphasis a bit," said
Steve Hardcastle, analyst at Sucden Financial.

Also weighing on copper are stocks in LME warehouses, which at
above 292,000 are up more than 10 percent since mid-May.

Aluminum MAL3 ended at $2,020 a tonne from $1,990 at the
close on Thursday. The metal used in transport and packaging is up
about 50 percent since April.

Part of the reason behind the gains are expectations of a
revival in the auto sector after U.S. President Barack Obama
signed into law a bill extending the "cash for clunkers" auto
sales incentive program. [ID:nN07391255]

Also pertinent are financing deals to release cash for
producers. Analysts estimate about 70 percent of the record 4.56
million tonnes of stocks in LME warehouses are tied up in such
deals until next May. [ID:nLL175677]

MARKET FACTORS

Zinc MZN3 ended bid at $1,899 a tonne, up from $1,846 on
Thursday. Traders expected the metal to come under strong pressure
from rising stocks in LME warehouses -- up more than 80,000 tonnes
to 433,525 tonnes over the last three weeks.

"The deliveries are to the U.S., coming from Asia ... Somebody
is trying to support physical premiums in Asia," a London-based
trader said. Nickel MNI3 ended at $19,625 a tonne, up from
$19,600 at the close on Thursday. About two-thirds of global
nickel production is used to make stainless steel, where signs of
reviving demand are beginning to emerge.

Also supportive were strikes at Brazil's Vale Inco's
(VALE5.SA) Sudbury nickel operations and Voisey's Bay mine in
Canada, which account for 85,000 and 77,500 tonnes respectively in
a market estimated at above 1 million tonnes. [ID:nN03510332]

"Strikes at the Vale facilities have in the past tended to be
prolonged which could result in significant volumes of lost
production," Barclays Capital said in a note.

Focus in the tin market was still on the dominant position
holder which has bought tin for delivery in September and sold it
for December. [ID:nL7149027]

Tin MSN3 ended bid at $14,750 a tonne, marginally up from
$14,700 a tonne, while battery material lead MPB3 finished with
a bid of $1,900, up from $1,855 at the close on Thursday.

Metal Prices at 1843 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 278.15 3.40 +1.24 139.50 99.39
LME Alum 2000.50 10.50 +0.53 1535.00 30.33
LME Cu 6125.00 100.00 +1.66 3060.00 100.16
LME Lead 1900.00 45.00 +2.43 999.00 90.19
LME Nickel 19623.00 23.00 +0.12 11700.00 67.72
LME Tin 14800.00 100.00 +0.68 10700.00 38.32
LME Zinc 1890.00 44.00 +2.38 1208.00 56.46
SHFE Alu 14920.00 -370.00 -2.42 11540.00 29.29
SHFE Cu* 46750.00 -1200.00 -2.50 23840.00 96.10
SHFE Zin 14780.00 -430.00 -2.83 10120.00 46.05
** 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 Nigel Hunt and Martina Fuchs in London;
editing by James Jukwey)