(pvs BEIJING, changes byline, releads, adds fresh comment andupdates prices throughout)
By Clare Black
LONDON, Nov 6 (Reuters) - Low stocks and healthy demandpushed zinc prices to fresh all-time highs on the London MetalExchange on Monday, taking their gain for the year to a whopping130 percent.
With fund interest also high in the metal used mainly tocoat steel to prevent it from rusting, analysts could not ruleout further gains, with most touting $5,000-a-tonne as anachievable target before the year-end.
By 0943 GMT, zinc futures <MZN3> were quoted at $4,370 atonne, up sharply from Friday's close of $4,292 and not far froma new record peak of $4,400.
Some traders attributed the new high to automatic buy ordersfrom a fund trading programme at the start of the day in Europe,noting that volumes were otherwise very thin.
Stephen Briggs, metals economist at Societe Generale, saidhe could not rule out prices rising towards $5,000/T in comingweeks, but he expected them to ease significantly next year asfresh supply starts to flow in.
"We still believe zinc mine production could surge by 20percent between 2006 and 2008," he said in a research note.
Zinc stocks held in LME warehouses fell 1,625 tonnes to101,350 -- their lowest in over a decade and a far cry from theswollen levels of April 2002 at over 970,000 tonnes.
COPPER STAGNATES
The strong performance in zinc failed to feed through tocopper, while aluminium eroded some of its earlier gains.
LME copper futures have been stuck in an $8,000-$7,000 rangefor the past four months, coming under pressure in recent weeksdue to inflows of stocks into exchange warehouses.
Bulls say that global inventories are still at historicallylow levels, leaving the market vulnerable to supply disruptions.
With that in mind, traders were eyeing looming labournegotiations at top copper producer Codelco's Norte division,which churns out most of the company's copper.
The current pact expires at the end of the year andnegotiations are meant to begin on Nov 17.
By 1015 GMT, copper for delivery in three months <MCU3> wasdown $50 at $7,280/7,300 a tonne.
"There is still virtually no volume trading to speak of,"one trader said.
"People have the positions they want to have, those who arelong are happy, those who are short are happy. They are happy tosit with them...therefore why trade?"
Chinese copper <0#SCF:> and aluminium <0#SAF:> futures putin a strong performance thanks to good domestic demand
LME aluminium futures <MAL3> rose a modest $19 to$2,801/2,806 a tonne. Traders were not ruling out further gainsbefore the end of the year, with a target of $3,000, althoughmuch would depend on copper's performance.
"It is still moving towards that target. To get it up andrunning you need it to close above the $2,830 area," one said.
"But I am not sure it will manage to do it on its own. Ifcopper is going down to $7,000, I think aluminium will find itvery difficult to roar up to $3,000."
Lead <MPB3> rose nearly 1 percent to $1,695/1,710, alsocarving out a fresh high of $1,705. Tin <MSN3> was virtuallyflat at $10,050/10,150 from $10,000/10,050.
Nickel <MNI3> bucked the firmer trend and fell 2.5 percentto $30,600/30,800 a tonne, but is not that far from last month'srecord high at $32,600 and is still up nearly 130 percent sincethe end of 2005.
(With additional reporting by Lucy Hornby in Beijing)
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