* Copper breaks $8,300 to highest in over two years
* Tin advances to new records
* Markets eye Challenger, ADP job reports later
(Updates throughout, previous SINGAPORE)
By Melanie Burton
LONDON, Oct 6 (Reuters) - Industrial metals paused below multi-month highs on Wednesday, but traders said inflation concerns and heady momentum suggest higher prices will be forthcoming near term.
Benchmark copper on the London Metal Exchange reached its highest since mid-July above $8,300, and was seen at $8,270 per tonne at 1007 GMT, up from Tuesday's $8,175 close.
Earlier, zinc, lead and nickel touched new five-month tops; aluminium cracked $2,400 for the first time since late April. Tin jumped over 3 percent at one point to a new record high of $26,790.
"There's an implicit expectation that, going forward you may have more inflationary pressures than you have at the moment, which is helping drive sentiment," said Bank of America-Merrill Lynch analyst Michael Widmer.
Falling currencies are seen to fuel inflation, making hard assets such as commodities more expensive as they rise in line with the cost of living.
"The inflation threat given improving macro numbers and hopes for further quantitative easing by the U.S. central bank are commodity supportive as the relative value of the U.S. currency falls," said Andrey Kryuchenkov of VTB Capital.
Traders and analysts expected momentum to stay after a surprise interest rate cut from the Bank of Japan fuelled anticipation of more monetary easing from the Fed.
In metals-related economic news, German manufacturing orders rose in August by 3.4 percent on the month, surpassing forecasts thanks to big-ticket orders for goods like planes, ships and trains, official data showed on Wednesday.
Also, two U.S. jobs reports are due later that will precursor Friday's major event, non-farm payrolls for September.
Challenger, Gray & Christmas Inc. releases its report on job cuts for September at 1130 GMT while Automatic Data Processing (ADP) releases its September employment report at 1215 GMT.
Metals could benefit either way, as poor figures will lift the chances of the Fed loosening monetary policy earlier, while firmer numbers will underline an improvement in the world's top economy, driving underlying demand for metals.
TIN UP 7 PERCENT
Concerns about in supply out of Indonesia continue to fuel gains in the LME's smallest market, where tin traded just below record highs at $26,450 per tonne, from $25,900 on Tuesday.
Tin has jumped by 7.6 percent since the start of October alone and has outperformed the rest of the LME complex, soaring by 58 percent this year.
"Besides enormous production problems in Indonesia and also in China lately, we are also seeing stronger stock reductions. Inventories on the LME alone have more than halved to 12.5 thousand tons this year," said Commerzbank in a note.
Refined tin output may fall nearly 6 percent this year as heavy rains hit mining in top exporter Indonesia, and more easily mined onshore reserves are being depleted, an analyst at the International Tin Research Institute said.
Meanwhile, a power-related shutdown at the end of September by China's second-largest refined tin producer, Yunnan Chengfeng, due to power shortages, has raised concerns the world's top consumer may suck away more of scant global supply.
In tin, LME inventories showed a small 5-tonne addition, the latest LME data showed, bringing total stockpiles held in LME warehouses to 12,550 tonnes.
This was more than offset however, by a large rise in cancelled warrants, or metal flagged for removal, which jumped by almost half to 750 tonnes. Total tin stockpiles still remain near their lowest since May 2009.
Across other metals, aluminium advanced to $2,387 last from $2,380 on Tuesday, while stainless steel material nickel was last at $24,978 from $24,700, having powered through the $25,000 mark to $25,200, for the first time since early May.
Lead came within a whisker of nine-month highs beyond $2,366.75, at $2,339.75, against $2,312 on Tuesday's close while zinc at $2,335 was up from $2,312, but Commerzbank warned the correction potential for these contracts was growing.
"As a rising tide lifts all boats, even those metals with virtually no fundamental basis for price gains will be pulled along, as is the case with zinc and lead...In our view, high correction potential has now built up as a result and this is all the greater the higher prices rise," it added.
Metal Prices at 1005 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 376.15 3.75 +1.01 334.65 12.40 LME Alum 2373.00 -7.00 -0.29 2230.00 6.41 LME Cu 8185.00 10.00 +0.12 7375.00 10.98 LME Lead 2311.00 0.00 +0.00 2432.00 -4.98 LME Nickel 24650.00 -50.00 -0.20 18525.00 33.06 LME Tin 25900.00 700.00 +2.78 16950.00 52.80 LME Zinc 2307.00 -5.00 -0.22 2560.00 -9.88 SHFE Alu 15870.00 -80.00 -0.50 17160.00 -7.52 SHFE Cu* 60600.00 -190.00 -0.31 59900.00 1.17 SHFE Zin 17875.00 -75.00 -0.42 21195.00 -15.66 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by James Jukwey)