METALS-Copper heads for weekly fall on rising stocks, stronger dollar

Feb 6 (Reuters) - Copper is set to end a volatile week lower on Friday, as rising inventories and a stronger U.S. dollar pressured the market.

The most-traded copper on the Shanghai Futures Exchange SCFcv1 declined 2.07% to 100,380 yuan ($14,463.98) a metric ton by 0310 GMT, and was set to end the week 7.34% lower.

It slipped as much as 4.47% to 97,920 yuan earlier in the session.

The benchmark three-month copper on the London Metal Exchange CMCU3 dropped 0.59% to $12,827.50 a ton, poised for a 2.52% weekly drop. It previously tumbled as much as 2.91%.

Copper joined gold XAU= and silver XAG= in a broader correction, as investors unwound long positions after copper hit a record on January 29. A brief rebound on Tuesday gave way to a cross-asset rout led by tech equities and precious metals.

Copper's weakness was also due to rising stocks across warehouses registered with major exchanges, as traders and analysts raised questions about demand in a high-price environment.

LME copper stocks MCUSTX-TOTAL have been on a uptrend since mid-January, and stood at 180,575 tons as of Wednesday. Comex copper HG-STX-COMEX totalled a record 586,429 short tons (531999.44 tons).

SHFE copper inventories CU-STX-SGH have climbed to their highest since April at 133,004 tons.

Meanwhile, the U.S. dollar =USD hovered near a two-week high, making greenback-denominated commodities less affordable for investors using other currencies.

"An unwind of extended longs is likely to keep price action choppy, particularly as liquidity thins into the Lunar New Year," analysts at Sucden Financial, including Daria Efanova and Viktoria Kuszak, said in their quarterly Metals Report.

The pullback in metals, however, have "unwound earlier excesses and pulled prices closer to fair value", Sucden analysts said, adding the reset "has reduced downside risks and leaves scope for sentiment to stabilise once momentum improves".

Elsewhere on SHFE, aluminium SAFcv1 dropped 0.97%, zinc SZNcv1 shed 0.65%, lead SPBcv1 dipped 0.15%, nickel SNIcv1 lost 2.35% and tin SSNcv1 slumped 5.60%.

On LME, aluminium CMAL3 and zinc CMZN3 ticked 0.05% and 0.08% lower, respectively, lead CMPB3 dipped 0.20%, nickel CMNI3 lost 1.15% and tin CMSN3 lost 2.01%.

Friday, February 6

DATA/EVENTS (GMT)

0700 Germany Industrial Output MM Dec

0700 Germany Industrial Output YY SA Dec

0700 UK Halifax House Prices MM, YY Jan

0745 France Reserve Assets Total Jan

1500 US U Mich Sentiment Prelim Feb

($1 = 6.9400 Chinese yuan renminbi)