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Copper fell to a fresh six-month low on Wednesday after a rise in inventories reinforced expectations that falling prices are likely to dominate the picture next year, analysts said.

Mining shares fell despite wider stock market gains. London-listed Xstrata, Kazakhmys, Rio Tinto and Antofagasta were all down around 0.3 percent.

Copper for delivery in three months traded down at $6,550 a tonne on the London Metal Exchange in official rings, from $6,640 on Tuesday. Prices have fallen by around 25 percent since the record high of $8,800 in May.

Stocks of copper at LME warehouses jumped 4,600 tonnes to 177,225 tonnes, In July 2005 copper stocks were little more than 25,000 tonnes.

The news sent copper prices tumbling to $6,510, the lowest since the middle of June. The previous six-month low of $6,618 was seen last Friday.

"(The fall) is on account of a ... rise in stocks and the announcement by workers at Chile's Altonorte copper smelter yesterday, that they have accepted an offer from Xstrata, said Man Financial in a research note.

Also under pressure was lead, down $5 at $1,630 after stocks rose 725 tonnes to 42,150. Earlier it fell to $1,590, matching the two-week low set last week.

Consultants think the rising stocks trend of recent weeks to continue and expect a lead surplus early next year.

Aluminium was down $46 at $2,764 after the stock data showed a rise of 1,600 to 685,450 tonnes.

CONTRACT DEALS

Analysts said the settlement of some crucial wage demands had taken away an important support for base metals prices.

Workers at two big unions at Chile's Codelco Norte, the largest division of the world's biggest copper miner, accepted a contract offer from the company on Tuesday.

The decision left union No. 1, the biggest and oldest at Codelco Norte, as the only one of the six unions at the division that has not reached an agreement with management. It said it would vote on the same offer on Wednesday.

Elsewhere in Chile, workers at the 300,000 tonne-per-year Altonorte copper smelter accepted an offer from owner Xstrata and ended their day-old strike on Tuesday.

However, opinion is split on whether the urbanisation of China, India and Brazil would boost metals demand to the extent that it offsets lower demand from the United States, where economic growth is slowing.

Many think it will be enough to support prices at current levels, others disagree.

"We are not particularly positive about 2007, you are going to see an increase in supply coming next year at a time when demand growth is likely to tail off a bit," Commerzbank analyst Peter Dixon said.

"Prices will remain fairly steady, but I think you will see the froth of this year taken away. I wouldn't be surprised to see falls of 10, even 20 percent."

Zinc was lower at $4,230/4,231 from Tuesday's $4,340 close, nickel gained $200 to $33,800 and tin traded down at $11,000 from $11,125/11,175.