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SINGAPORE, May 26 (Reuters) Copper held steady above $8,000 a tonne on Friday after gaining 3.3 percent the previous day on a technical rebound, but trade was choppy as recent high volatility scared off investors and forced exchanges to raise margins.

With other key commodities, such as oil and gold, copper has had a rollercoaster ride this week as investors juggle supply concerns with fears that rising inflation could lead to higher interest rates and dent economic growth.

By 0707 GMT, London Metal Exchange copper for delivery in three months was at $8,130/$8,150 a tonne, up $40 or 0.5 percent from Thursday's London close. It had earlier dipped below $8,000.

''Throughout the week, floor trading volumes on the LME have been subdued as many traders have taken to the sidelines during this period of uncertainty,'' Peter Richardson, chief metals economist at Deutsche Bank, said in a daily note.

''Although it is unclear how long the current level of volatility will persist, not only amongst base metals but the other major commodities, it is certain that this atmosphere of edginess will remain until a clear and fundamentally sound direction in the markets is established.'' LME copper rose $260 to end at $8,090 on Thursday, a day after the red metal gave up much of the previous day's record daily gain of more than 11 percent.

Prices for copper, used in construction and electronics, reached an all-time high of $8,800 on May 11, having jumped more than six-fold since late 2001 on strong demand in China and India, supply disruptions and relentless fund buying.

Since then, copper prices have fallen 7.6 percent, but they have still gained 85 percent since the end of last year.

Copper's sky-rocketing gain in the past years has lured a salvage firm to recover a sunken ship with a 5,500 tonne metal cargo off Spain's wild Atlantic coast, while theft of the metal, even in scrap form, is rising in Europe and elsewhere.[ID:nL23771948] Some copper coins are now worth more for their metal than their face value.

MARGIN HIKES In electronic trade, copper for July delivery rose 1.75 cents to $3.7250 a lb after trading between $3.6610 and $3.7500 on the New York Mercantile Exchange's COMEX division.

The New York Mercantile Exchange said on Thursday it will increase margins for its copper futures contracts, effective with the close of business on Friday.[ID:nN25558743] This was the second margin hike in this week.

The Shanghai Futures Exchange has also raised margins for its copper and aluminium contracts, the exchange said in a statement on its website (www.shfe.com.cn). [ID:nSHA102087] The minimum margin for copper has been lifted to 9 percent from 7 percent and for aluminium to 7 percent from 5 percent.

The active copper August contract ended up 1,230 yuan from the previous close at 73,990 yuan ($9,249) after trading as high as 74,380 yuan.

Shanghai spot copper prices were between 72,500 and 73,200 yuan, up 1,775 yuan from Thursday.

After the market close, the exchange announced that copper stocks fell by 137 tonnes in the week ended Thursday to 45,320 tonnes, while aluminium stocks declined by 8,088 tonnes to 176,514.

Shanghai's aluminium futures also rose, with the active August contract gaining 70 yuan from the previous close to end at 21,970 yuan.

LME aluminium was at $2,775/$2,785 a tonne against Thursday's London close of $2,755.

Zinc was at $3,520/$3,550 a tonne after rising $40 to end at $3,510 on Thursday. The metal, used as an anti-corrosive coating in galvanised steel production, reached a record $3,970 on May 11.

Shares of BHP Billiton , the world's top miner, rose 4.1 percent and Rio Tinto , the world's No. 2 miner, gained 4.63 percent, while Zinifex , the world's number two zinc producer, was up 5.17 percent.

In other commodities, oil prices extended gains over $71 a barrel on Friday, supported by healthy U.S. economic growth, while gold edged above $650 an ounce after rising more than 1 percent the previous day.

Metal Prices by 0707 GMT LME ($/tonne), SFE (yuan/tonne) and COMEX (US cents/lb) Metal Last Net Change Pct Move LME Cu 8130.00 40.00 +0.49 SHFE Cu* 73990.00 1230.00 +1.69 LME Alum 2775.00 20.00 +0.73 SHFE Alu* 21970.00 70.00 +0.32 COMEX Cu** 390.15 0.00 +0.00 LME Zinc 3520.00 10.00 +0.28 LME Nickel 22100.00 0.00 +0.00 LME Lead 1100.00 0.00 +0.00 LME Tin 8000.00 -25.00 -0.31 Change so far in 2006 Metal Latest bid End prev year Pct Move LME Cu 8130.00 4395.00 +84.98 SHFE Cu* 73990.00 41720.00 +77.35 LME Alum 2775.00 2276.00 +21.92 SHFE Alu* 21970.00 19360.00 +13.48 COMEX Cu** 390.15 204.20 +91.06 LME Zinc 3520.00 1905.00 +84.78 LME Nickel 22100.00 13500.00 +63.70 LME Lead 1100.00 1051.00 +4.66 LME Tin 8000.00 6475.00 +23.55 * 3rd contract months for SHFE copper and aluminium.

** 1st contract month for COMEX copper.

($1=8.00 yuan) REUTERS CS RK1412