METALS-Copper hits 10-month high, investors bet on growth

* Fund money flowing into base metals

* Shortages help aluminum climb above $2,000 a tonne

* Tin market focus on September long position

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

By Chris Kelly and Pratima Desai

NEW YORK/LONDON, Aug 5 (Reuters) - Copper prices scaled new
10-month highs on Wednesday, as investors continued to bid prices
up amid expectations of stronger global economic growth and
demand.

Expectations of rising demand from auto makers and a shortage
of material for nearby delivery drove aluminum to $2,115 a tonne,
its highest since last November, while nickel leapt to $20,410, a
level last seen in August 2008.

Copper for September delivery HGU9 on the New York
Mercantile Exchange's COMEX division ended up 1.65 cents at
$2.8120 a lb, after dealing between $2.7490 and $2.8385, a new
high dating back to early October.

Three-month copper MCU3 on the London Metal Exchange hit
$6,235 a tonne, the highest since last October and ended bid at
$6,199, up $149 from Tuesday's close.

Prices of the metal used in power and construction have
doubled so far this year.

Deutsche Bank analyst Joel Crane cited increased sentiment
that the world is coming out of recession much faster than
originally anticipated as a key factor in the run-up.

"Until that (economic optimism) trade slows down, until I see
evidence that fund money is going to slow down entering the
complex, I don't expect a turnaround in sentiment at least in the
very near term," he said.

Still, others sided with caution, feeling the heady gains
recorded during the past month have well exceeded fundamentals.

"Copper at $2.80 (a lb), approaching $3.00, is way overdone,"
said Zachary Oxman, managing director with TrendMax Futures in
Encinitas, California.

"ISM this morning and the private sector jobs number showed us
that we still have a good trudge ahead of us," he said.

U.S. private employers cut more jobs than expected last month
and the vast services sector contracted again, raising concerns
about the strength of a U.S. recovery. [ID:nN05240699]

The weak services and labor market data overshadowed an
unexpected rise in U.S. June factory orders. [ID:nN05243228]

RELEASE CASH

Aluminum MAL3 ended at $2,070, just below the day's peak and
sharply up from $1,990 a tonne at the close on Tuesday.

The metal used in transport and packaging is up more than 40
percent since April, despite record high stocks -- above 4.56
million tonnes in LME warehouses.

Price gains have partly been triggered by shortages as about
70 percent of the LME stocks are thought to be tied up in
financing deals to release cash for producers. [ID:nLL175677]

Also behind this week's gains was news that U.S. auto sales
jumped to their highest level in 2009 in July as Americans rushed
to take advantage of the government's "cash for clunkers" program.
[ID:nN03530480]

"It looks as if the worst hit sectors -- autos and
construction -- in the United States may be on the brink of
recovery," a trader said.

Stainless steel ingredient nickel MNI3 ended at $20,450 a
tonne from Tuesday's final $19,375 a tonne.

"Stainless steel destocking by distributors has been
subsiding, and this has provided increasing support," Bank of
America said in a note.

"However, distributors have so far not started to re-stock in
significant amounts, though this may change as the economic
recovery unfolds. End user demand remains weak in many countries,
but we expect a rebound through 2010."

Tin MSN3 ended at $15,300 a tonne from Tuesday's last bid at
$14,750. The market was focused 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. On Tuesday it
traded at $1,000 a tonne.

Zinc MZN3 ended at $1,920 a tonne from $1,853 and lead
MPB3 at $1,945 from $1,921.

Metal Prices at 1850 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 281.15 2.25 +0.81 139.50 101.54
LME Alum 2055.00 65.00 +3.27 1535.00 33.88
LME Cu 6195.00 145.00 +2.40 3060.00 102.45
LME Lead 1955.00 34.00 +1.77 999.00 95.70
LME Nickel 20300.00 925.00 +4.77 11700.00 73.50
LME Tin 15200.00 250.00 +1.67 10700.00 42.06
LME Zinc 1920.00 67.00 +3.62 1208.00 58.94
SHFE Alu 15200.00 165.00 +1.10 11540.00 31.72
SHFE Cu* 48090.00 270.00 +0.56 23840.00 101.72
SHFE Zin 15195.00 75.00 +0.50 10120.00 50.15
** 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 Martina Fuchs and Nigel Hunt; editing by
James Jukwey and Sue Thomas and Lisa Shumaker)