London - Copper fell on Friday for a second straight day as concerns about growth in top consumer China weighed on the outlook for industrial metals demand, but further losses were capped by a weak dollar.

Three-month copper on the London Metal Exchange traded at $6,924.50 a tonne in official rings, down from a last bid of $7,010 on Thursday.

The metal is still headed for its third weekly increase in four, after hitting a one-month high of $7,119 on Wednesday as upbeat US and European data helped counter signs of weakness in the Chinese economy.

Uncertainty about the outlook for growth in China, the world's biggest copper consumer, is likely to dictate the price direction for the metal used in power and construction, analysts said.

“There is still concern about the Chinese economy. Market players seem to be weighing the weaker data against what the Chinese government is saying about the economy and many are waiting for more macro data next week for a more convincing picture,” said Daniel Briesemann, an analyst at Commerzbank.

China's final HSBC manufacturing purchasing managers index (PMI) is due next Thursday, followed by the HSBC services PMI on August 5.

Losses in copper prices were stemmed by a drop in the dollar against a basket of currencies to a five-week low, on caution about the possibility of the US Federal Reserve delivering a downbeat message after its policy meeting next week.

A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies.

Copper also found some support from data which showed that copper stocks held in LME warehouses dropped by 1,775 tonnes, as inventories continue their steady decline from 10-year highs hit in June.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 3.5 percent from last Friday, the exchange said on Friday, but analysts said the cycle of declines could be coming to an end.

“Lower... bonded warehouse materials are placing more emphasis on stock declines in Shanghai inventories, but we could be coming towards the end of declines as seasonal demand passes in the third quarter,” ANZ analysts said in a note.

In industry news, Freeport McMoRan Copper & Gold Inc's subsidiary in Indonesia will offer a 5 percent stake to the public and is in talks with three local smelters on copper concentrate supply deals, company and government officials.

Benchmark aluminium traded at $1,805 a tonne from a close of $1,823 on Thursday, lead was at $2,066 from $2,070 and tin at $19,275 from $19,375.

Nickel traded at $13,900 from $14,175 on Thursday.

Zinc, untraded in official rings, was bid at $1,866 from Thursday's close of $1,877.50. - Reuters