Copper down on firm dollar, awaits U.S. data

* Copper down almost 2 percent on firm dollar after Ifo data

* Demand weak, copper seen falling towards $7,000 a tonne

* Zinc drops over 3 percent on oversupply, seen lower (Corrects price to ... $1,600 in paragraph six) (Adds fresh comment/details, changes dateline PVS SHANGHAI)

By Anna Stablum

LONDON, Aug 26 (Reuters) - Rising stocks and a firmer U.S. dollar dampened sentiment in industrial metals on Tuesday, while investors awaited U.S. data for more clues about the health of the global economy and future demand.

"We are looking for more downside in copper, towards $7,000 per tonne very short term, until we see any signs of a pick up particularly in Chinese import buying," said analyst Gayle Berry at Barclays Capital.

London Metal Exchange copper for delivery in three months MCU3 fell $135 to $7,525 a tonne by 0932 GMT, after diving by 2.6 percent on Friday before a long weekend with London closed on Monday.

Zinc MZN3 shed 3.8 percent or $70 to $1,760 per tonne.

"We are still very bearish on zinc," Berry said, referring to ample supplies of the metal used to galvanise steel.

"Prices look likely to fall further to $1,550 ... $1,600 can turn out to be a good cost-support level," she added.

Last week, copper gained 3.8 percent, zinc rose 8.4 percent and nickel, lead and tin were up around 11 percent as the dollar eased amid an overall firmer dollar trend.

Rising stocks weighed on copper, up 3,100 tonnes to a six-month high of 166,900, up 52 percent since this year's low in May.

In Shanghai, rumours about large volumes of stock inflows from top copper producer Chile weighed on sentiment.

But Fairfax investment bank said in a note they expected a recovery in metals demand within China to soak up much surplus material, keeping prices supported.

"Renewed buying ... is now expected to draw stocks into China particularly for copper, copper concentrates, iron ore, ferrochrome and coal," it said.

FUTURE DEMAND

Worries about the global economy weighed on metals markets as demand was seen slowing on both sides of the Atlantic.

World stocks hit their lowest level in almost two years on Tuesday as a worsening German business mood and fresh concerns about financial firms triggered a sell-off in risky assets, lifting the dollar to a 2008 high. [ID:nLQ174419]

The Munich-based Ifo economic research institute said its business climate index fell to a lower-than-expected 94.8 this month from 97.5 in July, adding to growing evidence that growth outside the United States is deteriorating and accelerating the euro's tumble.

Investors would look out for the U.S. Redbook at 1255 GMT, U.S. new home sales for July at 1400 GMT, U.S. consumer confidence for August 1400 GMT and U.S. FOMC minutes from August meeting at 1800 GMT.

In industry news, global miner Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz) (RIO.L: Quote, Profile, Research, Stock Buzz) posted a better-than-expected 55 percent jump in first-half profit, boosted by its 2007 takeover of Alcan and strong Chinese demand.

"While the equity markets are currently focused on downside risks, we believe there are potential offsets on the upside based on continued strength in commodity demand, low inventory levels and a supply side which continues to face multiple constraints," Chairman Paul Skinner said in a statement.

China's economic growth could slip below 9 percent, after years of double-digit rises, if the government does not make drastic policy changes, JPMorgan Chase's chief China economist Frank Gong said.[ID:nSEO11602]

At the same time China's hunger for metals was seen lasting with the country in urgent need to build up infrastructure such as rail transport, he said.

Tin MSN3 was higher at $21,000 against last quote on Friday at $20,900/20,950, while aluminium MAL3 shed $15 to $2,765 and nickel MNI3 fell to $20,150 versus $20,800.

Three-month lead MPB3 eased to $1,860 from Friday's $1,885.

China's lead consumption growth may slow in the second half of this year as weaker domestic demand for electric bicycles offsets increased export orders for car and truck batteries. [ID:nHKG20033]

(Additional reporting by Alfred Cang, editing by Michael Roddy)