RPT-METALS-Copper ends strong as U.S. economy resumes growth

(Repeats to fix link to story on Chile copper strike)

* Stocks rebound after U.S. Q3 GDP exceeds forecasts

* Weaker U.S. dollar supports metals rally

* Lead surges more than 6 percent

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

By Chris Kelly and Michael Taylor

NEW YORK/LONDON, Oct 29 (Reuters) - Copper rallied into the close on Thursday, after government data showing the U.S. economy grew in the third quarter for the first time in more than a year dented safe-haven dollar demand and improved the metal's prospects.

Copper for December delivery HGZ9 on the New York Mercantile Exchange's COMEX division surged 9.90 cents, or 3.4 percent, to settle at $3.0295 a lb, near the upper end of its session range of $2.9180 to $3.0395.

On the London Metal Exchange (LME), copper for three-month delivery MCU3 settled up $234.50 at $6,664.50 a tonne. Earlier, the metal used in power and construction hit a session high of $6,675, up nearly 4 percent on the day.

The rally was triggered by renewed optimism about recovery in the global economy after data showed the U.S. economy expand at a 3.5 percent annual growth rate in the third quarter, unofficially ending the worst recession in 70 years. [ID:nN29354547]

"It's not a surprise we're on the road to recovery. However the metals are driven by equity market sentiment (and) there's still a strong inverse correlation with the dollar," said Andrey Kryuchenkov, analyst at VTB Capital.

Indeed, European and U.S equity markets turned positive after the solid gross domestic product reading, which also reduced the dollar's safe-haven allure, making dollar-priced metals cheaper for non-U.S. investors. [.EU] [.N] [USD/]

Copper prices have more than doubled this year, boosted by a weaker dollar, strong investment interest and record imports from China, the world's biggest metals consumer.

Earlier this week, data showed China's refined copper imports surged by more than a quarter in September, defying calls for a drop in second-half imports and sending copper to 13 month highs. Investors are now waiting to see if the Chinese will continue buying in November. [ID:nBJI000173]

Looking to next week, analysts said U.S. ISM manufacturing data would be important in determining the outlook for metals demand, more so than the GDP reading.

"The reason the market reacted as it did was because it was oversold in the short term. GDP is backward looking. If you want to see real action, you have to look at data like the ISM," said Jesper Dannesboe, senior commodity strategist at Societe Generale.

INVENTORIES SLIP

Helping sentiment, LME copper inventories bucked a recent bearish trend and fell slightly, although worries over demand outside China remained. Inventories of copper at LME warehouses shed 325 tonnes to remain near five-month highs at 371,400 tonnes.

In industry news, BHP Billiton (BLT.L) (BHP.AX) has reduced production to a minimum at its Spence copper mine in Chile, with no end in sight for the 17-day labor dispute. [ID:nN29363252]

Elsewhere, prices were bolstered by news that Japanese industrial output rose for the seventh month running in September thanks to ongoing stimulus measures. [ID:nT303012]

In other metals traded, battery material lead MPB3 was last bid at $2,365 a tonne from $2,231. Earlier, it shot up nearly 7 percent to $2,380, as it caught up with broader gains in the complex after five straight days of losses.

Steel-making ingredient nickel MNI3 finished at $18,690 from $17,800, having risen more than 5 percent to $18,750, while zinc MZN3, used to galvanize steel, was last bid at $2,265 from $2,190.

Aluminum MAL3 ended at $1,955 versus $1,912, while tin MSN3 finished at $15,000 from $14,650.

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

move COMEX Cu 302.10 9.95 +3.41 139.50 116.56 LME Alum 1955.00 43.00 +2.25 1535.00 27.36 LME Cu 6654.00 224.00 +3.48 3060.00 117.45 LME Lead 2363.00 132.00 +5.92 999.00 136.54 LME Nickel 18750.00 950.00 +5.34 11700.00 60.26 LME Tin 15001.00 351.00 +2.40 10700.00 40.20 LME Zinc 2260.00 70.00 +3.20 1208.00 87.09 SHFE Alu 15120.00 -170.00 -1.11 11540.00 31.02 SHFE Cu* 50030.00 -1250.00 -2.44 23840.00 109.86 SHFE Zin 16465.00 -450.00 -2.66 10120.00 62.70 ** 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)