Aug. 4 (Bloomberg) -- Copper fell the most in three weeks in London as inventory monitored by the London Metal Exchange surged almost 12 percent, easing concern about a shortage of supply.

Inventory in warehouses monitored by the London Metal Exchange, or LME, rose by 3,675 metric tons to 35,125 tons, the highest since June 17. That's the biggest gain in stocks levels since April 22. Copper for delivery in three months rose to a record $3,596 a metric ton yesterday.

``The market was looking for an excuse to correct anyway, because it was overbought,'' Angus MacMillan, an analyst in London at Bache Financial, a unit of Prudential Financial Inc., the second-biggest U.S. life insurer, said in a phone interview. ``The stock rises have given the market the excuse it needs.''

Copper fell as much as $38, or 1 percent, to $3,548 a ton on the LME, the biggest intraday decline since July 12. It was down $21 at $3,565 as of 10:31 a.m. in London. Copper has risen almost 13 percent this year as surging demand in China and the U.S., the world's largest users of the metal, depleted inventory. Stocks reached a 31-year low of 25,525 tons on July 22.

Warehouses in the Netherlands and the U.K. reported the biggest gains. Inventory in Singapore rose by 350 tons, the first gain since July 15.

Traders in Shanghai were speculating that 30,000 tons of copper would be delivered into LME warehouses in Singapore, Cai Luoyi, a metals analyst at China International Futures (Shanghai) Co. said Aug 2.

``The rumored big stock increases from the Far East haven't materialized,'' MacMillan said. ``Unless we see that the market will remain tight.''

``We don't really believe in hidden inventories,'' Michael Lewis, head of commodities research at Deutsche Bank AG, said in an interview in Tokyo today. ``At these prices a lot of them would have been sold.''

Copper prices will continue to climb this year, ``easing into 2006,'' he said, without elaborating.

Amongst other metals for delivery in three months on the LME, aluminum fell $8 to $1,891 while lead declined $3 to $868. Nickel fell $45 to $14,300 and zinc rose $1 to $1,298. Tin dropped $100 to $7,200.

To contact the reporter on this story: Mark Cobley in London at mcobley@bloomberg.net

Last Updated: August 4, 2005 05:47 EDT