* LME nickel inventories jump nearly 10,000 tonnes
* Lead price hits three-week low (Updates with closing prices)
By Eric Onstad
LONDON, Feb 24 (Reuters) - Copper further eroded recent gains on Wednesday on concern about the strength of demand following Lunar New Year holidays in China and as investors shunned risky assets.
Nickel fell after inventories rose while tin bucked the bearish trend following the shutdown of a smelter in Indonesia.
“The yen, dollar and gold are all stronger, showing the risk-off markets are again in full mode,” said Robin Bhar, head of metals research at Societe Generale in London.
“Apart from the flurry on Monday, we’ve not really seen the volumes maintaining those loftier levels so there’s still a lot of uncertainty about post Lunar New Year buying interest from China,” he said.
Copper prices rose last week, partly on hopes that restocking would gain momentum in top metals consumer China after the end of New Year celebrations.
Three-month copper on the London Metal Exchange closed down 0.1 percent at $4,641 a tonne, falling further from a two-week high on Monday and following a 1 percent drop on Tuesday.
Also undermining metals was a drop in oil prices after Saudi Arabia ruled out production cuts and an industry report said U.S. crude stockpiles hit a record, underlining the supply glut.
“If you want metal markets and mined commodities to bottom, there are a few things that need to happen, one of which is stability or a lift in oil,” said analyst Dan Morgan at UBS in Sydney.
Falling oil prices cut the cost of producing commodities, which was also shoring up metals supply, he said.
LME nickel fell 1 percent to end at $8,525 a tonne after data showed LME inventories rose nearly 9,864 tonnes to 445,260 tonnes. MNISTX-TOTAL
LME tin jumped 1.7 percent to close at $16,000 a tonne after touching a session high of $16,145, near to Tuesday’s four-month peak.
Tin has rallied after lower prices prompted an Indonesian smelter to shut, potentially deepening a global supply deficit. The premium of LME cash tin to the three-month contract CMSN0-3 jumped to $175 a tonne, the highest since October, indicating tight supplies.
LME aluminium climbed 1.3 percent to finish at $1,567 a tonne after data earlier this week showed global aluminium production declined by 1.6 percent year-on-year in January.
“This was already the third monthly decrease in a row and is attributable to China, where 4.5 percent less aluminium than last year was produced in January,” said Commerzbank in a note.
Lead dropped 1.1 percent to $1,692, a three-week low, while zinc gained 1 percent to close at $1,755.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
$1 = 6.5312 Chinese yuan renminbi Additional reporting by Melanie Burton in Melbourne; Editing by Susan Fenton and David Clarke