* Copper rallies on easier oil, global equities jump
* LME copper stocks continue to climb
* Indonesian tin production seen down
* Coming up: U.S. regional manufacturing data Monday (Recasts, adds New York dateline/byline, updates with New York closing copper price, adds graphic and analyst comments)
By Chris Kelly and Melanie Burton
NEW YORK/LONDON, Feb 25 (Reuters) - Copper posted its biggest daily advance in three months on Friday, as buyers for the industrial metal emerged after energy prices retreated from this week's sharp rally, calming worries about inflation and the global economy.
Copper remained off record highs at $10,190 per tonne in London and $4.6575 per lb, as investors remained concerned the turmoil in Libya could spread to other major oil-producing countries, causing energy prices to spike and hurting demand for industrial metals.
"A lot of the trade this week is about oil," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
"The fact that the crude isn't higher and it appears to have peaked takes some of the inflation pressures off of the economies of the world."
London Metal Exchange (LME) copper for three-month delivery CMCU3 shot up $245 or 2.6 percent to close at $9,750 a tonne, its biggest one-day gain since early December.
The active May COMEX copper contract HGK1 surged 11.15 cents to finish at $4.4550 per lb.
Oil fell from highs on Friday after top exporter Saudi Arabia stepped up supplies, helping push global equities higher, although worries that expensive oil might threaten global growth kept those gains in check. [O/R]
"Focus now is on the Middle East," analyst Arne Rasmussen of Danske Bank said.
"Definitely the last couple of days we've seen this fear that rising oil prices would dampen global growth, but prices are a bit more stable today, so optimism is returning," he said.
"People are suddenly realising copper below $10,000 might be a bargain."
The easing fears over energy prices offset data showing the U.S. economy grew slower than initially estimated in the fourth quarter. [ID:nCAT005386]
However, copper's rally drew additional support from news that U.S. consumer sentiment rose to its highest in three years in February. [ID:nN25299682].
"Going into next week, we suspect that downward pressure on oil markets will likely continue, particularly as investors start to discount the likely fall of the Libyan leader," said MF Global in a research note.
"This ... should provide a measure of support to both the metals and U.S. equity markets, at least until the next flashpoint appears on the radar."
CHINA STOCKS
Talk that Chinese market players are holding high inventories of copper has weakened the short-term outlook for the metal.
"Stocks on the LME and inventories held in China have been rising for some time," VTB Capital analyst Andrey Kryuchenkov said.
"We expect that demand in China will pick up. Maybe in March or in the second quarter we will see a stocks drop," he said, adding demand for copper usually increases in the spring as construction activity increases.
LME copper stocks extended a bearish trend in place since December of last year, rising by 4,150 tonnes to 416,825 tonnes, data released on Friday showed. MCU-STOCKS
Copper inventories now stand at their highest level since July 2010. Stocks are up more than 19 percent since the Dec. 9, trough at 348,625 tonnes. (Graphic: link.reuters.com/suf38r )
"Current on-warrant LME stocks are now nearly 55,000 above the levels seen in mid-January, with almost all of the increase occurring in Asian warehouses," said Standard Bank in a note.
In general, inventories have been rising in Far Eastern LME locations in recent weeks as metal is diverted from Chinese ports due to demand, which remains lackluster. [ID:nLDE71726P]
However, weekly Shanghai copper stocks fell by 2,961 tonnes, data showed today. CU-STX-SGH
Tin CMSN3 closed at $32,050 from $31,600, tracking back towards record of $32,799 from Feb 15.
Indonesia's state-owned PT Timah (TINS.JK), the world's largest integrated tin miner, said Friday that first-quarter production would be lower than expected because of rains and rough seas. [ID:nL3E7DP18J] Metal Prices at 1913 GMT COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct
move COMEX Cu 446.75 12.40 +2.85 444.70 0.46 LME Alum 2565.00 23.00 +0.90 2470.00 3.85 LME Cu 9760.00 255.00 +2.68 9600.00 1.67 LME Lead 2516.00 16.00 +0.64 2550.00 -1.33 LME Nickel 28190.00 685.00 +2.49 24750.00 13.90 LME Tin 32050.00 450.00 +1.42 26900.00 19.14 LME Zinc 2490.50 17.50 +0.71 2454.00 1.49 SHFE Alu 17095.00 40.00 +0.23 16840.00 1.51 SHFE Cu* 72590.00 1170.00 +1.64 71850.00 1.03 SHFE Zin 19250.00 110.00 +0.57 19475.00 -1.16 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Silvia Antonioli in London; editing by James Jukwey, Jane Baird and David Gregorio)
