UPDATE 7-Lead and zinc rally on short-covering

* Lead up 10.4 pct and zinc jumps 6.6 pct on short-covering

* Copper off lows on Peruvian strike threat, demand woes
persist

* Aluminium turns up, high LME stocks still a concern
(Updates with New York closing copper prices, adds analyst
comments)

By Raissa Kasolowsky

LONDON, July 9 (Reuters) - Lead jumped 10.4 percent on
Wednesday on signs London Metal Exchange stocks started to level
off and zinc rallied 6.6 percent as investors covered their short
positions, traders said.

Aluminium turned higher at the close, but it was still down
from a record high as abundant supplies of the metal weighed on
sentiment.

Lead for delivery in three months MPB3 hit an intraday high
of $1,800 per tonne just after it closed at $1,790, up 9.8
percent, compared to $1,630 on Tuesday.

"Stocks appear to be levelling out after four months of strong
gains," said analyst David Thurtell at BNP Paribas.

"Cancelled warrants have jumped in recent days, which suggests
that the low prices of recent weeks has sparked some significant
offtake."

Lead prices have more than halved since early March as LME
inventories have more than doubled due to lack of demand.

There was also talk of supply disruptions in the United
States.

"This triggered a little bit more interest in the market and
now several stops have been triggered," a trader said.

Zinc bounced 6.6 percent on short-covering, traders said,
after prices have fallen some 23 percent so far this year.

Zinc MZN3 closed at its intraday high of $1,865 per tonne
against $1,750 on Tuesday.

ALUMINIUM TURNS HIGHER

Aluminium MAL3 for three-months delivery closed up at $3,190
per tonne, after trading in negative terrain for most of the
session. On Tuesday it closed at $3,145, after falling almost 6
percent.

The metal hit a record high of $3,320 on Monday on supply
concerns in China, aluminium's top producer.

But sentiment was dampened after the rally due to high stock
levels in LME warehouses at around 1.08 million tonnes, enough for
more than 10 days of global consumption.

"There's a lot of metal around on the LME and off-warrant, and
premiums are generally drifting lower," said analyst Daniel Smith
at Standard Chartered.

"It's difficult to create a particularly bullish scenario for
aluminium."

Energy-intensive aluminium, used in transport, packaging and
power, gained nearly 40 percent since the start of the year,
mainly due to power problems threatening supply in China.

This week's move was triggered by Aluminium Corp of China
(Chalco) (2600.HK: Quote, Profile, Research) (601600.SS: Quote, Profile, Research), which said the firm's two
aluminium smelters -- with combined capacity of 500,000 tonnes --
in Shanxi province had tight power supplies. [ID:nHKG18057]

Copper MCU3 last traded at $8,200/8,210 per tonne, unchanged
from Tuesday's close.

In New York, copper for September delivery HGU8 ended up
4.25 cents at $3.7390 a lb on the the New York Mercantile
Exchange's COMEX division.

The metal, used in wiring and construction, touched an
all-time high of $8,940 per tonne in London and hurdled the $4
mark in New York on July 2, after a strike in Peru raised supply
fears.

On Wednesday, workers at Freeport-McMoRan's (FCX.N: Quote, Profile, Research) Cerro
Verde copper pit in Peru plan to strike starting July 16, a union
leader said. [ID:nN09403474]

But Leon Westgate, an analyst at Standard Bank, did not think
the action would have much of an impact on the market.

"The last strike was short lived, and they have given notice,
so it is not a wildcat action," he said.

Catherine Virga, an analyst with CPM Group in New York,
agreed.

"In Peru, they are normally not long-running issues. As long
as it's just them, I don't think it will be something sustainable,
especially with continued increases in stock levels on the LME."

LME copper warehouse stocks jumped 2,150 tonnes to 124,325
tonnes on Wednesday.

Nickel MNI3 closed down at $21,450 a tonne from $20,600,
while tin MSN3 last traded at $22,800/22,850 from $22,450.
(Additional reporting by Anna Stablum in London and Chris Kelly
in New York; Editing by Christian Wiessner)