Aluminium prices jumped to a three-month high on Friday as investors bought on news a U.S. producer shut down about half its capacity, while copper hit a one-month high.

Benchmark aluminium on the London Metal Exchange hit $3,158 a tonne, its highest level since March 14. It traded up at $3,137 in official rings from Thursday's close at $3,070.

Aluminium producer Alcoa said on Thursday it would temporarily idle half the production at its Rockdale, Texas, smelter because of local power supply problems.

Three of the plant's six operating potlines -- representing about 120,000 tonnes per year of production -- have been shut down as a result of the electricity supply interruptions.

The Alcoa news has reminded the market of the highly dependent nature of aluminium supply on both the price and supply of power, said David Thurtell, analyst at BNP Paribas.

A profit-warning on Thursday from Aluminium Corp of China, citing problems with power supply and production disruptions because of the January severe snowstorms in China has also reinforced concerns about supplies.

Adding to that was news on Thursday that India's National Aluminium Co Ltd (NALCO) may cut production if coal shortages continue.

Analysts say aluminium is heading back towards the record high of $3,300 a tonne hit in May 2006, and could possibly spike above if power problems in China escalate over the summer.

China raised the tariff on electricity by about 4.7 percent on Thursday.


Copper touched $8,444 a tonne, the highest since May 19 and traded at $8,421 in official rings from $8,330 a tonne on Thursday.

Analysts say gains in the metal used widely in power and construction were based on hopes of economic revival as oil prices fell to around $132 a barrel after earlier this week hitting an all-time high of $139.89.

The trigger was fuel price hikes in China, the world's second largest consumer of oil after the United States.

The logic behind investor optimism is that lower energy costs could mean central banks would have more room to cut interest rates and bolster economic growth and demand.

Whenever the market thinks central banks will tighten monetary policy, base metals tend to come off and vice versa, said Michael Widmer, analyst at Lehman Brothers.

But Widmer along with Thurtell thinks the base metal market is probably being too optimistic.

Oil prices would have to fall a lot further before central banks take their itchy fingers off the interest rate trigger, Thurtell said.

Zinc traded at $1,957 a tonne from $1,934, lead at $1,875 from $1,811, tin at $22,850 from $22,400 and nickel was bid at $22,600 from $22,200. Metal Prices at 1208 GMT Metal Last Change Percent Move End 2007 Ytd Percent

move LME Cu 8440.00 110.00 +1.32 6670.00 26.54 SHFE Cu* 62490.00 170.00 +0.27 56880.00 9.86 LME Alum 3145.00 75.00 +2.44 2403.00 30.88 SHFE Alu* 19345.00 230.00 +1.20 18180.00 6.41 COMEX Cu** 377.75 0.00 +0.00 303.05 24.65 LME Zinc 1955.00 21.00 +1.09 2370.00 -17.51 SHFE Zinc* 16050.00 -140.00 -0.86 18950.00 -15.30 LME Nick 22600.00 400.00 +1.80 26350.00 -14.23 LME Lead 1860.00 49.00 +2.71 2550.00 -27.06 LME Tin 22800.00 400.00 +1.79 16400.00 39.02 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

(Reporting by Pratima Desai; editing by Christopher Johnson)

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