LONDON - Copper prices slid on Monday, retreating from a recent rally as the U.S. dollar strengthened and analysts cautioned that prices exceeded the fundamental picture.


Copper for three-month delivery on the London Metal Exchange traded at $5,060 (U.S.) a tonne at 0941 GMT from a close of $5,230 at the close on Friday.

"The dollar will keep on giving metals direction," said Standard Bank analyst Leon Westgate. "With the slower summer period .... (in the) short-term metals will track foreign exchange markets."

A stronger dollar makes metals priced in the U.S. currency more expensive for holders of other currencies.

The dollar was boosted by comments from Russia's finance minister that the U.S. currency's role as the world's main reserve currency is unlikely to change in the near future.

Copper used in power and construction hit an 8-month high of $5,388 a tonne last Thursday on a slew of improving economic data, but analysts say the rally was over-zealous as fundamentals remain weak.

The market will look to the New York Fed manufacturing data later on Monday for its next steer.

Copper prices have risen more than 60 per cent so far this year in a rally sparked by increased demand from China. But this demand, which appears to have been based largely on stockpiling by the world's top copper consumer, appears to be tailing off.

Also underlining that demand could be subsiding, cancelled warrants - material tagged for delivery - fell to 21,375 from 24,725 and compared with 40,175 on June 1.

"In fundamental terms, the recovery had been very largely a Chinese story," said Stephen Briggs, a commodities strategist at London's RBS Global Banking & Markets.

"The level of imports we've seen so far this year is unlikely to be sustained in summer months, so we're in for a period of correction."

Among other industrial metals, aluminum traded at $1,614 from $1,644.

From a fundamental perspective aluminum looks weak. Despite a handful of drawdowns in the past two weeks, stocks are around record levels above 4.27 million tonnes.

A series of potential production restarts in China threatens to add further pressure to the over-supplied market.

May output data from China showed aluminum production up 14 per cent at 999,300 tonnes, though still short of last August's peak of 1.18 million.

Zinc traded at $1,630 from $1,690. Weighing on the metal, inventories rose 1,725 tonnes, to 331,700 tonnes.

Battery material lead traded at $1,740 from $1,780.

Tin was at $15,350 from $15,325.

Nickel was at $ 15.079 from $ 15,690.