April 26, 2019 / 11:37 AM / a year ago

METALS-Copper rises as dollar comes off highs, trade talks loom

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates with official prices, U.S GDP)

By Zandi Shabalala

LONDON, April 26 (Reuters) - Copper and most other industrial metals inched higher on Friday, boosted by a retreat in the dollar and hopes that a meeting between the United States and China could help ease damaging trade tensions.

Three-month copper on the London Metal Exchange was bid 0.4 percent higher at $6,387.50 a tonne after failing to trade in official rings. It is still on track for a 1.5 percent weekly decline, however.

The metal used in power and construction hit its lowest since March 28 on Thursday on a strong U.S. dollar and worries over the outlook for the global economy.

“The dollar has been pretty strong lately which has been quite a drag, and that has now reversed a bit,” Capital Economics analyst Ross Strachan said, adding that the market generally is “fairly quiet”.

He said metals markets were mostly pricing in a resolution to a long-standing trade conflict between China and the United States as the world’s two largest economies prepare for talks.

The dollar index eased versus a basket of six major currencies on Friday but stayed near its two-year peak.

A weaker greenback makes dollar-denominated metals cheaper for buyers with other currencies.

“We believe prices will witness limited upside in the coming weeks unless a U.S.-China trade deal is finally struck, as concerns over global growth continue,” Fitch Solutions said in a report.

U.S. GDP: U.S. economic growth accelerated in the first quarter, but the burst in growth was driven by trade and the largest accumulation of unsold goods since 2015, temporary factors that are likely to reverse in the coming quarters.

LME STOCKS: Total copper inventories in LME-approved warehouses have jumped more than 70 percent since mid-March to 195,900 tonnes. MCUSTX-TOTAL

SHANGHAI STOCKS: Aluminium inventories in warehouses monitored by the Shanghai Futures Exchange AL-STX-SGH fell to the lowest since October 2017 at 638,030 tonnes, while copper stocks CU-STX-SGH hit a two-month low of 219,679 tonnes.

SPREADS: The premium of cash zinc over the three-month contract has been steadily rising this year and reached about $120 on Friday, showing low availability of supplies in LME-approved warehouses. CMZN0-3

COPPER OUTPUT: Freeport-McMoRan Inc’s copper output fell 18 percent to around 340,000 tonnes in the first quarter, while Anglo American’s production rose by 4 percent to 161,100 tonnes.

GLENCORE/AURELIA: Australian miner Aurelia Metals Ltd said it was in talks about a possible acquisition of Glencore’s CSA copper mine in the state of New South Wales.

PRICES: Aluminium was the sole decliner, bid 0.5 percent lower at $1,848 per tonne, while zinc was bid up 1.1 percent to $2,771, lead was bid 0.2 percent firmer at $1,936, tin was bid up 0.2 percent at $19,850, and nickel was up 0.2 percent to $12,345 in electronic trading by 1245 GMT.

Additional reporting by Mai Nguyen in SINGAPORE; Editing by Jan Harvey

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