By Daniel Magnowski

LONDON (Reuters) - Industrial metals prices slipped on Tuesday on news of an 8 percent rise in unused copper inventories, and against a backdrop of concern about the health of the global economy, analysts said.

Mining shares drifted in a market-wide fall, with Xstrata down 1.1 percent, Rio Tinto down 0.18 and Vedanta Resources 0.2 on a London share index that was 0.55 percent lower by 0947 GMT.

Copper for delivery in three months at the London Metal Exchange, often seen as a gauge of the real economy, was 1.2 down percent at $7,220/7,240 per tonne.

It had been trading steadily until the LME released data showing stocks of unused metal held in warehouses leapt by more than 10,000 tonnes on Tuesday to 135,625, their highest since May.

"Everyone was waiting for the stocks data, and it was a big rise," UBS analyst Robin Bhar said. "It knocked the stuffing out of the price. It points to softer demand for copper."

Copper, along with other commodities, was hit hard when investors sold holdings for cash to cover losses elsewhere as stock markets fell in the wake of the collapse in the U.S. sub-prime mortgage market earlier this month.

Copper is now down 12 percent from its July high, but still more than 14 percent up on the start of the year.

In the broader financial system, worries about the possibility of tighter credit markets slowing economic growth in the aftermath of the turmoil in the high-risk home loans sector have not gone away.

"There are still lingering concerns," Bhar said.

Metals, seen as high-risk investments, remained vulnerable to more sell-offs.

"At the moment any rallies are there to be sold into," he said.

Steelmaking raw material nickel was down $850 after industry sources said Posco, the world's fourth-largest steelmaker, would cut stainless steel output by another 25,000 tonnes in response to slower demand..

The South Korean firm has already cut production this year as the price of nickel, a key ingredient in rust-free steel, has lurched between $25,100 and $51,800.

Aluminium was down $8 at $2,547/2,552 and zinc was down $69 at $3,070/3,090.

Lead was down $45 at $3,195/3,215 while tin was down $50 at $14,500/14,600.

In China, shares in resources firms surged after Beijing said it would allow individuals to buy Hong Kong-listed securities for the first time.

Metal Prices at 1041 GMT: Metal Last Change Percent Move End 2006 Ytd Percent

move LME Cu 7240.00 -70.00 -0.96 6330.00 14.38 SHFE Cu* 64860.00 -830.00 -1.26 60080.00 7.96 LME Alum 2547.00 -8.00 -0.31 2805.00 -9.20 SHFE Alu* 19400.00 -80.00 -0.41 20550.00 -5.60 COMEX Cu** 332.00 -6.40 -1.89 287.10 15.64 LME Zinc 3070.00 -69.00 -2.20 4230.00 -27.42 SHFE Zinc* 27135.00 -285.00 -1.04 28915.00 -6.16 LME Nick 26850.00 -850.00 -3.07 33325.00 -19.43 LME Lead 3200.00 -40.00 -1.23 1670.00 91.62 LME Tin 14500.00 -50.00 -0.34 11510.00 25.98 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07