UPDATE 9-Rising stocks, demand worries weigh on aluminium

* Higher aluminium stocks, weak auto demand

* Chinese demand worries undermine copper

* Lead down on sluggish demand in Asia (Updates with New York closing copper prices, adds analyst comment)

By Julie Crust

LONDON, July 16 (Reuters) - Aluminium prices fell on Wednesday as the market worried about rising stocks and soft demand from auto makers, while fears of slowing demand from China pushed copper lower.

Aluminium MAL3 for three-month delivery on the London Metal Exchange ended at $3,125 a tonne compared with $3,215 at the close on Tuesday. Earlier it hit an intra-day low of $3,083, down by 4.1 percent.

Three-month lead MPB3 closed at $1,965 a tonne, after hitting $1,880 down 5.5 percent. It closed at $1,990 on Tuesday.

"We don't think prices will fall too far, given the turnaround and the change in fundamentals which are supportive in our view," said Gayle Berry, an analyst at Barclays Capital.

Stocks have been falling in Singapore over the past few days pushing prices higher, up some 8 percent during the last week.

She said lead had been moved from Singapore to China to take advantage of favourable domestic Chinese prices versus the LME.

In aluminium, stocks in LME warehouses rose by 24,825 tonnes to 1.115 million tonnes, the highest since May 2004.

"There is still plenty of metal available," said Nick Moore, an analyst at ABN Amro. He noted that 26,200 tonnes had come from Detroit, reflecting weakness in the auto industry.

Earlier this week data from the United States showed auto and auto parts sales fell 3.3 percent in June, their worst month since February 2006. Year-on-year they tumbled 9.5 percent.

Aluminium used in transport, packaging and power hit a record high of $3,380 a tonne last week on expectations of lower supplies from China, the world's top consumer and producer, and rising energy costs.

Electricity accounts for up to 45 percent of aluminium smelting costs, analysts said.

WEAKNESS MASKED

Copper MCU3 ended down $65 at $8,080 a tonne on Tuesday in London. In New York, copper for September delivery HGU8 lost 4.95 cents by the close to $3.6505 per pound on the New York Mercantile Exchange's COMEX division.

The metal used in power and construction is down over 9 percent since hitting a record high in London at $8,940 on July 2 on concern about a strike in Peru. COMEX copper is down 10.5 percent from its early-July peak of $4.08.

Worries about slower demand from China, the world's top consumer, have hit sentiment in the copper market over the last few days.

"Recent disruptions in Latin America have masked weaker demand," ABN Amro's Moore said.

Growing perceptions of slower economic growth have heightened those demand concerns, dealers said.

"I think a lot of people are thinking that the U.S. is going to slow down so much that we're going to pull China, India, Russia, Brazil, and all of these growing countries that have helped to push these commodity markets higher, down with us," said Michael K. Smith, president of T & K Futures and Options Inc. in Port St. Lucie, Florida.

However, dominant holdings of warrants on copper stocks in LME warehouses and cash material MCU0 has left the market short of material in the very near term.

That is reflected in the backwardation or premium for cash material over the three-month contract, which at around $235 a tonne is the highest since September 2005.

In lead, traders noted cancelled warrants -- metal earmarked for delivery from LME warehouses -- in Singapore had dried up and had fallen relative to total stocks and that the difference in price between China and the LME had narrowed, resulting in buying interest drying up.

Asian cancelled warrants were as high as 7,225 tonnes on July 9, accounting for some 23 percent of total stocks and currently they are at around 5.5 percent of the total.

Zinc MZN3 came under selling pressure for the second day running, down 4 percent to an intra-day low of $1,770 a tonne, before ending at $1,795. It closed at $1,844 on Tuesday.

China's small and medium-sized zinc smelters agreed on Saturday to cut production by 10 percent from July to September, but a two-day industry meeting ended on Wednesday without the proposal being discussed. [ID:nSHA229929]

"Zinc is a market that is looking oversupplied this year and we expect prices to fall further," said Berry.

Nickel MNI3 was at $20,400 down from $20,850 and tin MSN3 was lower at $23,150/23,300 from $23,350.

(Additional reporting by Pratima Desai and Anna Stablum in London and Chris Kelly in New York; editing by Christopher Johnson)