* Zinc stocks jump above 800,000 T for first time since 1995
* Aluminium hits new two-and-a-half year high on input costs
* U.S existing home sales rise 3.7 percent in March
(Updates with closing prices)
By Melanie Burton
LONDON, April 20 (Reuters) - Copper rose to its highest in a week on Wednesday after U.S. housing sector data showed more signs of revival in that market and the dollar weakened, while aluminium hit new two-and-a-half-year highs.
Three-month copper on the London Metal Exchange closed at $9,577 per tonne from a close of $9,340 on Tuesday.
Copper, which is used in power and construction, had fallen to a one-month trough at $9,207 a tonne on Monday.
"The LME complex is trading higher as improved economic data in the U.S. and Europe adds to the impact of good earnings reports for the first quarter," Citi analyst David Thurtell said.
Sales of previously owned U.S. homes rose more than expected in March, a trade group said on Wednesday, raising cautious optimism a recovery may be in sight for the housing market.
Data on Tuesday showed U.S. housing starts and permits for future home construction rose more than expected in March, raising prospects that consumption in the world's second major market for metals was gathering pace.
In broader markets, risk sentiment improved, underpinning investor appetite for the metals, and the dollar weakened, making metals cheaper for holders of other currencies.
The euro surged to its highest in 15 months against the dollar boosted by higher risk appetite and after a bond auction from Spain was well received by investors.
Upbeat U.S. and European corporate earnings also helped soothe market sentiment shaken after rating agency S&P warned it could cut U.S. sovereign credit rating and as speculation intensified that Greece would need to restructure its debt.
"In Europe, they're persistently hawkish, but there is massive concern regarding peripheral debt...the dollar has a big chance of rebounding in the second half of the year," said Andrey Kryuchenkov at VTB Capital.
ALUMINIUM HITS FRESH HIGIHS
Aluminium, which is used in transport, packaging and construction, has been lifted by rising power prices, which account for about 35 percent of aluminium smelting costs.
A Chinese directive to pare back new smelting plants may also have helped fuel its advance, Citi's Thurtell said.
"The aluminium market has hit new highs for the cycle as the LME complex lifts and as Beijing looks to limit new capacity in the domestic aluminium industry," he said.
China on Wednesday, in a circular posted on a government website, called on central and provincial authorities to stop approving the construction of new aluminium smelting capacity.
"(The move) limits the probability of Chinese expansions taking the world into chronic oversupply," he said.
"The authorities are concerned that artificial tightness induced by financing/rent deals in the Western world could encourage over-expansion and an eventual bust."
China accounted for around two-thirds of global aluminium output last year.
Aluminium closed at $2,730 a tonne, up from $2,714 at the close on Tuesday. It earlier hit its highest level in two and a half years at $2,745 a tonne.
Zinc closed at $2,360 a tonne from $2,329, despite a large 26,550-tonne shipment of the metal into New Orleans warehouses. LME stockpiles now stand at 812,100 tonnes, their highest level since 1995.
"Galvanised production is not doing too badly but zinc is a supply driven market... and there is just too much out there," said Michael Widmer, analyst at BoA-Merrill Lynch.
Tin closed at $32,650 from $32,400 while stainless steel material nickel changed hands at $26,400 from $25,300.
Metal Prices at 1615 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent
move COMEX Cu 434.20 11.25 +2.66 444.70 -2.36 LME Alum 2729.00 15.00 +0.55 2470.00 10.49 LME Cu 9577.00 237.00 +2.54 9600.00 -0.24 LME Lead 2612.00 55.00 +2.15 2550.00 2.43 LME Nickel 26395.00 1095.00 +4.33 24750.00 6.65 LME Tin 32650.00 250.00 +0.77 26900.00 21.38 LME Zinc 2355.00 26.00 +1.12 2454.00 -4.03 SHFE Alu 16855.00 150.00 +0.90 16840.00 0.09 SHFE Cu* 70910.00 1470.00 +2.12 71850.00 -1.31 SHFE Zin 17985.00 305.00 +1.73 19475.00 -7.65 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Sue Thomas; editing by James Jukwey)