METALS-Copper extends gains on scramble for scarce metal

(Updates prices, adds analyst comment and LONDON dateline)

By Eric Onstad

LONDON, Oct 19 (Reuters) - Copper prices marched higher on Tuesday as industrial users sought material from declining inventories while speculative buyers also piled in.

Three-month copper on the London Metal Exchange (LME) had climbed 1.3% to $10,323 a tonne by 1015 GMT, while the most-traded November copper contract on the Shanghai Futures Exchange closed up with a 0.2% gain at 75,810 yuan ($11,834.77) a tonne.

LME copper has jumped by 15% in less than two weeks, moving closer to a record peak of $10,747.50 touched in May, supported by sliding inventories and concerns over inflation.

"Specs are attracted by commodities as an inflation hedge while the physical guys are trying to get as much material as possible," said Gianclaudio Torlizzi, partner at the T-Commodity consultancy in Milan.

"Climate-change policies are a game changer, increasing demand for copper all over the world, so China is no longer the main driver."

LME cash copper's premium over the three-month contract hit a record high of $1,103.50 a tonne on Monday, compared with only $55 a a week earlier, indicating extremely tight near-term inventories. The premium eased to $740 on Tuesday.

"There seems to really be no copper around," said Marex commodities broker Anna Stablum in Singapore.

A weaker dollar also made greenback-priced metals cheaper to holders of other currencies.

Further support came from a Peruvian community's threat to block a mining road used by MMG's Las Bambas copper mine.

* On-warrant LME copper inventories plunged to 14,150 tonnes on Friday, their lowest since 1998, with one entity controlling between 50% and 79% of LME copper warrants and short-term futures , LME data showed.

* One party held more than 90% of available LME lead stocks and short-term futures .

* LME aluminium rose 1.2% to $3,205 a tonne, nickel advanced 2.4% to $20,470 a tonne, lead gained 0.9% to $2,399, tin jumped 2.5% to a record $38,745, but zinc eased 0.1% to $3,692.50.

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($1 = 6.4057 yuan)

(Reporting by Eric Onstad Additional reporting by Mai Nguyen in Hanoi Editing by David Goodman)

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