METALS-Aluminium heads for weekly gains amid Middle East supply fears

March 6 (Reuters) - Aluminium is set to end the week higher on Friday due to supply concerns, as all eyes are on the war-hit Middle East, which produced 8% of the world's aluminium last year.

The most-active aluminium contract on the Shanghai Futures Exchange declined 2.03% to 24,650 yuan ($3,571.43) a metric ton as of 0305 GMT, poised to end the week up near 4%.

The benchmark three-month aluminium on the London Metal Exchange, however, added 0.42% to $3,310 a ton, on track to post more than 5% weekly gain. All eyes are on the Middle East, as disruptions started to materialise following force majeures at Norsk Hydro's (NHYKF) Qatalum and Aluminium Bahrain.

The gains are, however, capped as the U.S. dollar strengthened, on track to post a more than 1.3% weekly gain amid deepening conflicts. A stronger dollar weighs on commodities denominated by the greenback by making them less affordable for investors using other currencies.

Oil prices spiked, stoking inflation worries and prompting investors to lower expectations for U.S. rate cuts.

Meanwhile, SHFE's on-warrant aluminium stocks have been building after investors returned from a weekend when the war broke out, totalling 319,354 tons as of Thursday, up 10.39% from last Friday.

But LME aluminium inventories are on the fall, sinking to the lowest since July last year.

Elsewhere, copper is poised to post a weekly loss. The Shanghai most-active copper ticked 0.19% upwards to 101,520 yuan a ton and is set to end the week down more than 1%.

The London benchmark copper, meanwhile, rose 0.73% to $12,996 a ton, on track to end the week down more than 2%.

Copper is under pressure from a rapid gain in exchange stock levels.

"LME copper has been trading at only a narrow premium to Comex, reversing last year's structure that encouraged metal to flow into US warehouses. As these pricing signals normalise, metal is increasingly being redirected back into global exchange stocks," analysts at ING Economics said in a note.

Copper stocks sitting in the LME warehouses saw a sharp inflow of more than 20,000 tons, totalling 282,200 tons on Wednesday, according to the latest data from the exchange.

Among other base metals on SHFE, zinc declined 1.42%, lead dipped 0.24%, nickel nudged 0.12% lower, and tin shed 0.32%.

Elsewhere on the LME, zinc added 0.99%, lead rose 0.36%, nickel increased 0.88% and tin gained 0.49%.

Friday, March 6

DATA/EVENTS (GMT)

0700 Germany Industrial Orders MM Jan

0700 Germany Manufacturing O/P Cur Price SA Jan

0700 Germany Consumer Goods SA Jan

0700 UK Halifax House Prices MM, YY Feb

0745 France Reserve Assets Total Feb

1000 EU GDP Revised QQ, YY Q4

1230 US Retail Sales MM Jan

1330 US Non-Farm Payrolls Feb

1330 US Unemployment Rate Feb

1330 US Average Earnings YY Feb

($1 = 6.9020 Chinese yuan renminbi) (Reporting by Lewis Jackson and Dylan Duan; Additional reporting by Tom Daly in London; Editing by Rashmi Aich)