METALS-Copper settles lower on weak U.S. confidence data

* Stronger dollar weighs

* Copper inventories rise; aluminum stocks dip

* U.S. consumer confidence slips in October

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

By Chris Kelly and Michael Taylor

NEW YORK/LONDON, Oct 27 (Reuters) - Copper succumbed to currency related liquidation pressures on Tuesday, after weak U.S. consumer confidence bolstered the greenback's safe haven appeal and cast doubts over the pace of economic recovery.

Copper for December delivery HGZ9 on the New York Mercantile Exchange's COMEX division shed 1.20 cents to settle at $2.9990 a lb, after dealing between $2.9440 and $3.0290.

"I think it's mostly from this two-day strong bounce in the dollar," said Matthew Zeman, head of trading with LaSalle Futures Group in Chicago. "The consumer confidence numbers were not good. Copper looks like it's starting to waver around this $3 mark."

On the London Metal Exchange (LME), copper for three-month delivery MCU3 ended down $28 at $6,585 a tonne. On Monday, the metal used in power and construction touched a 13-month high of $6,732.

The Conference Board's U.S. consumer confidence index fell to 47.7 this month from 53.4 in September, its weakest since July and well below forecasts for a reading of 53.1. For story, see [ID:nN27236301]

"Everything has been eclipsed by the consumer confidence data," said Peter Fertig, analyst at Quantitative Commodity Research.

The disappointing confidence data helped push the dollar to a two-week high against the euro as investors flocked to the perceived safety of cash amid renewed doubts about recovery prospects. A stronger dollar makes dollar-priced metals more expensive for non-U.S. investors. [USD/]

DEMAND TO EASE?

Copper was supported on Monday by data showing hefty imports into China, the world's largest copper consumer, in September. But some analyst doubt the strong buying will continue through the year end. [ID:nBJI000173]

"The rate of (Chinese) buying seems likely to slow now into the year end and with restocking elsewhere remaining lackluster the line of least resistance for the short term would appear to be to the downside," RBC Capital Markets said in a note.

Elsewhere, investors were eyeing LME stocks, which continue to rise, indicating demand has yet to recover outside China. The latest data showed stocks rose 1,800 tonnes to total 370,650 -- their highest level since mid-May. <LME/STX1>

India's central bank laid the groundwork for a rise in interest rates. The looser monetary policy follows a similar move by the Bank of Australia amid signs of an easing in the global economic crisis. [ID:nDEL485971]

On the supply side, however, a 15-day worker strike at Chile's Spence copper mine continued to underscore mounting supply-side concerns.

In other metals, aluminum MAL3 ended at $1,985 from $1,998, having earlier touched $2,030, its highest in over two months.

LME stocks of the metal, used in transport and packaging, fell 4,475 tonnes to 4.57 million tonnes, maintaining a slow retreat away from record levels that began in mid September.

Aluminum Corp of China Ltd (Chalco) (2600.HK), the world's most valuable aluminum maker, returned to profit in the third quarter on recovering demand and prices for the metal. [ID:nHKG177802]

Analysts said trend-following hedge funds such as CTAs or Commodity Trading Advisors are said to be piling into aluminum.

Steel-making ingredient nickel MNI3 finished flat at $18,650, having earlier touched $18,476, its lowest in nearly two weeks. Battery material lead MPB3 ended at $2,270.50 from $2,310, having earlier touched a one week low of $2,260.

Zinc MZN3 ended at $2,313 a tonne from $2,315 and tin MSN3 at $15,300 from $15,255.

Zinc touched a 17-month high at $2,365.75 on Monday as analysts cited improving physical demand. [ID:nLN320526]

Metal Prices at 1844 GMT Metal Last Change Pct Move End 2008 Ytd Pct

move COMEX Cu 298.85 -1.10 -0.37 139.50 114.23 LME Alum 1980.00 -18.00 -0.90 1535.00 28.99 LME Cu 6598.00 -15.00 -0.23 3060.00 115.62 LME Lead 2270.00 -90.00 -3.81 999.00 127.23 LME Nickel 18635.00 -15.00 -0.08 11700.00 59.27 LME Tin 15250.00 -5.00 -0.03 10700.00 42.52 LME Zinc 2295.00 -20.00 -0.86 1208.00 89.98 SHFE Alu 15220.00 -50.00 -0.33 11540.00 31.89 SHFE Cu* 51160.00 -700.00 -1.35 23840.00 114.60 SHFE Zin 17145.00 -115.00 -0.67 10120.00 69.42 ** 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 Maytaal Angel in London; Editing by Lisa Shumaker)