Aluminium recovers from 3-week low on weaker dollar

Aluminium recovered from three-week lows on Thursday helped by a lower dollar, but the metal was still under pressure from market worries about weaker demand from top consumer China.

Aluminium for three-month delivery on the London Metal Exchange ended at $3,127 a tonne from $3,125 at the close on Wednesday.

News that economic growth in China slowed to 10.1 percent in the second quarter from 10.6 percent in the first three months of the year weighed on sentiment.

The market also discounted news last week that China's top 20 aluminium producers would cut output by up to 10 percent as they struggle with power supply shortages and higher costs.

The announcement had helped push aluminium prices to a record high of $3,380 a tonne.

China is also the world's top consumer of aluminium.

Also helping the energy-intensive metal last week were record-high oil prices. Power accounts for up to 45 percent of aluminium smelting costs.

However, oil prices, which hit record highs above $147 a barrel last week, have fallen this week.

The dollar fell against the euro after comments from a European Central Bank policymaker emphasised the bank's inflation-fighting mandate. A softer U.S. currency makes dollar-priced metals cheaper for holders of other currency holders and tend to support prices.

Analysts cite rising stocks of aluminium in LME warehouses as another reason for bearish sentiment. Stocks at around 1.11 million are up about 25 percent since January.

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