Copper firmed on Friday on track for an 11 percent gain in the first quarter of the year, as the dollar softened and metal inventories in Asia fell, although fears persisted of weak demand in top consumer China.

Benchmark copper on the London Metal Exchange (LME) was $8,436 at 1400 GMT, up from $8,350 at the close on Thursday.

The metal used in power and construction rallied in January and hit a five-month high at $8,765 in February. It has lost steam since mainly because of slowing economic growth in China, which accounts for 40 percent of global copper consumption.

Copper has been trading in a $8,100-8,800 range in the last few weeks as conflicting signals stymie investors.

Although you do have a market very worried about Chinese demand, metals have been performing surprisingly well, said Barclays Capital analyst Gayle Berry.

I think we will see more range trading for copper unless something convincing sparks a change.

Partially offsetting worries about slowing economic growth in China, U.S. data in the last few weeks has pointed to a recovery in the world's largest economy.

U.S. consumer spending increased by the most in seven months in February as households shook off a rise in petrol prices, suggesting the economy may not have slowed as much this quarter as economists had thought.

The dollar hit a one-month low against a basket of currencies, extending falls on expectations of more U.S. monetary stimulus and helping the euro hold its ground as the bloc agreed steps to prevent the debt crisis spreading.

A weaker U.S. unit makes dollar-priced commodities such as metals cheaper for holders of other currencies.

LEAD RECOVERS

Underpinning prices, inventories of copper in warehouses monitored by the London Metal Exchange have been falling in the last six months, signaling improving demand for the metal.

After a 2-1/2 month run up, copper inventories in warehouses monitored by the Shanghai Futures Exchange have also started to decline in the last two weeks.

Falling inventories and strong Chinese imports underscore the positive cyclical picture for most markets, Credit Suisse said in a research note.

Combined with undervaluation and a neutral trend, we have a rather upbeat outlook for the one-year time horizon.

The release of the Chinese PMI over the weekend will be key for the near-term. China's official manufacturing PMI, and the final reading for March are due on Sunday.

This data, which previews the country's giant factory sector before official industrial production data, may have dipped to 50.8 in March from a four-month high of 51.0 in February.

In other metals, prices of zinc surpassed lead this month for the first time since September 2011, reversing their traditional relationship.

The two metals are currently trading at similar levels but analysts see fundamentals pushing lead prices ahead once again.

We see lead prices increasing. It has been suffering from short-selling but I think there is quite a lot of upside potential, particularly because of supply side support, Berry said.

Doe Run declared force majeure on lead output from the United States' sole primary producer in Herculaneum, Missouri, following a fire last week which will stop production for up to six weeks.

Three-month lead was $2,023 at 1508 GMT from $1,995 and zinc was flat at $2,005.

Nickel was $17,481 from $17,150.

The stainless steel ingredient was potentially the biggest loser among the base metals this quarter, falling 6 percent.

Tin was $23,180 from $22,700 while aluminum exchanged hands at $2,141 from $2,135.

Metal Prices at 1411 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 383.10 3.45 +0.91 444.70 -13.85

LME Alum 2140.75 5.75 +0.27 2470.00 -13.33

LME Cu 8436.75 86.75 +1.04 9600.00 -12.12

LME Lead 2022.75 27.75 +1.39 2550.00 -20.68

LME Nickel 17501.00 351.00 +2.05 24750.00 -29.29

LME Tin 23100.00 400.00 +1.76 26900.00 -14.13

LME Zinc 2004.00 -1.00 -0.05 2454.00 -18.34

SHFE Alu 16165.00 -5.00 -0.03 16840.00 -4.01

SHFE Cu* 60010.00 270.00 +0.45 71850.00 -16.48

SHFE Zin 15445.00 105.00 +0.68 19475.00 -20.69 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07