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 closed daytime trading down 2.34% to 100,100 yuan ($14,424.88) a metric ton. The Shanghai copper ended the week declining 7.70%, the steepest weekly loss since July 2022.

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 fell 0.87% to $12,790.50 a ton as of 0700 GMT, poised for a 2.78% weekly drop. The contract was paring losses after tumbling as much as 2.91% earlier in the session.

Copper joined gold XAU= and silver XAG= in a broader correction, as investors unwound long positions following copper setting a record high 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, has "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 1.31%, zinc SZNcv1 shed 1.01%, lead SPBcv1 dipped 0.45%, nickel SNIcv1 lost 2.61% and tin SSNcv1 slumped 5.86%.

On LME, aluminium CMAL3 dropped 0.35%, zinc CMZN3 shed 0.50%, lead CMPB3 dipped 0.33%, nickel CMNI3 lost 1.44% and tin CMSN3 lost 1.38%.

($1 = 6.9394 Chinese yuan renminbi)