Copper falls on dollar, China inflation worries

* Copper warehouse inventories rise

* China March inflation accelerates to 5.4 percent - media

* Coming up: U.S. weekly initial jobless claims; 1330 GMT

(Updates prices; adds comment)

By Sue Thomas

LONDON, April 14 (Reuters) - Copper fell to its lowest in around 10 days on Thursday as reports of quickening inflation in top consumer China signalled more monetary tightening and the dollar strengthened against the euro.

Three-month copper on the London Metal Exchange was $9,355 a tonne in official rings, compared with $9,515 at the close on Wednesday.

"If you look at copper alone, there is no support for immediate demand," VTB Capital analyst Andrey Kryuchenkov said. "We're in the second quarter, a crucial time when we need China to restock, but we haven't seen that yet. I think there are renewed growth concerns."

He pointed to open interest in copper, which has fallen since mid-January, reflecting investor caution and a steady rise in warehouse inventories since December.

LME copper open interest has fallen more than 10 percent from its peak of 324,420 lots on Jan. 14 to 289,215 lots on Tuesday.

Stocks of the metal in LME warehouses rose 875 tonnes to 450,800 tonnes, data on Thursday showed.

INFLATION

Adding to worries that China's appetite for metals will be curbed, Hong Kong media reported Chinese inflation in March accelerated faster than expected to 5.4 percent from a year earlier, reinforcing the government's vow to rein in price rises.

"Inflation in emerging economies has become a serious issue, as the impact from high commodity prices is stronger for those countries," said Arnaud Scarpaci, fund manager at Paris-based Agilis Gestion.

The official release of the data is due on Friday.

Premier Wen Jiabao has also warned about inflation risks due to soaring global commodity and oil prices, pointing to another interest rate hike.

China's central bank has increased benchmark interest rates four times since last October and has required the country's big banks to put a record high of 20 percent of their deposits with the central bank as reserves.

"It is concerning because it builds on all the other concerns," Kryuchenkov said. "It builds on Japan, it builds on the slow demand we're seeing at the moment. We seem to be dominated by macro events at the moment."

The United States is due to release March producer prices and weekly jobless claims on Thursday, which could offer a glimpse at the health of the world's largest economy.

The euro slipped broadly, hitting a session low versus the dollar on debt restructuring worries in Europe. A stronger dollar makes metals more expensive for holders of other currencies.

Indications that governments across the world may be getting closer to rolling back easy monetary policies also weighed on market sentiment.

This week, U.S. and European central bank officials agreed their institutions must withdraw some of the extraordinary support they provided to help their economies recover from a deep financial crisis.

Zinc stocks rose nearly 3.6 percent, registering their biggest daily percentage rise since early December. Zinc, used in galvanizing, fell to $2,393 in rings, from a close of $2,421.

"It just demonstrates that the market has generally been oversupplied outside of China since the recession," said Giles Lloyd, an analyst at CRU.

The International Lead and Zinc Study Group (ILZSG) forecast a surplus of almost 200,000 tonnes this year, the fifth year running., untraded in rings, was bid at $2,625 from 2,679.5. The ILZSG raised its forecast for a global surplus of refined lead production for 2011 to 123,000 tonnes from around 90,000.

Tin was $32,300 in rings, from $32,250, reflecting the still solid fundamentals for the metal used mostly in solder in the electronics industry.

Aluminium, untraded in rings, was bid at $2,641.5 from $2,642, and nickel was $26,050 from $26,250.

Metal Prices at 1214 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent

move COMEX Cu 426.50 -2.95 -0.69 444.70 -4.09 LME Alum 2641.50 -0.50 -0.02 2470.00 6.94 LME Cu 9351.00 -164.00 -1.72 9600.00 -2.59 LME Lead 2625.00 -54.50 -2.03 2550.00 2.94 LME Nickel 26075.00 -175.00 -0.67 24750.00 5.35 LME Tin 32275.00 25.00 +0.08 26900.00 19.98 LME Zinc 2393.00 -28.00 -1.16 2454.00 -2.49 SHFE Alu 16725.00 -65.00 -0.39 16840.00 -0.68 SHFE Cu* 71100.00 -1080.00 -1.50 71850.00 -1.04 SHFE Zin 18345.00 -220.00 -1.19 19475.00 -5.80 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

(Source: http://www.forexyard.com/en/news/METALS-Copper-falls-on-dollar-China-inflation-worries-2011-04-14T122542Z)