(Recasts, updates prices)

BEIJING, April 1 (Reuters) - Copper prices in Shanghai

climbed on Monday as China's positive industrial data raised the

demand outlook of the metal, but gains were capped by high

inventories.

The most-traded May copper contract on the Shanghai Futures

Exchange closed morning trade 0.7% higher at 72,810

yuan ($10,072.35) per metric ton, having notched a 5.4% rise in

March, its biggest monthly gain in 16 months.

The London Metal Exchange (LME) is closed on Monday for the

Easter Monday holiday.

The gains followed an official factory survey on Sunday

showing China's manufacturing activity expanded for the first

time in six months in March.

Though the pace of growth was modest, it was also the

highest PMI reading since March of last year, when momentum from

the lifting of COVID-19 restrictions in China began to stall.

Data showing easing U.S. prices also bolstered investors'

hopes of the Federal Reserve cutting interest rates in June.

However, mounting stocks weighed on prices during the

session. On-warrant copper stocks monitored by the SHFE

, hovering near a four-year peak, was almost nine

times higher than that at the beginning of this year.

The higher-than-usual stocks were attributed to the still

slow demand from end users, especially after copper futures

surged last month as raw material shortages led to smelters'

plans to control their output, China Futures analysts said in a

note.

Spot prices to buy copper remained at a discount to futures

prices in the last one week .

SHFE aluminium gained 0.3% to 19,685 yuan a ton,

zinc nudged 0.1% higher to 20,985 yuan, while nickel

lost 0.4% to 129,910 yuan, lead declined 1.4%

to 16,490 yuan, and tin was down 0.2% at 225,590 yuan.

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($1 = 7.2287 Chinese yuan renminbi)