December 4, 2014 / 10:15 AM / in 5 years

METALS-Copper climbs on weak dollar, nickel hits two-month peak

* Dollar index on track for biggest 1-day fall since mid-Oct

* Euro jumps after ECB failed to give signal on stimulus

* Oyu Tolgoi fire under control - spokesman

* Nickel hits highest in over two months (Updates with closing prices)

By Harpreet Bhal and Eric Onstad

KUALA LUMPUR/LONDON, Dec 4 (Reuters) - Copper climbed on Thursday to its highest in nearly a week as the dollar slid following uncertainty about potential stimulus in Europe and after a fire at a mine, though concerns about the outlook for demand from top consumer China limited gains.

Three-month copper on the London Metal Exchange (LME) closed up 1.3 percent at $6,465 a tonne, reversing two days of falls and touching the strongest level since Nov. 28.

The dollar fell against the euro after European Central Bank President Mario Draghi failed to give a strong signal about injecting more stimulus into the euro zone economy.

The dollar index was on track for the largest one-day drop since mid-October. A weaker dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

“Most of the upward move in copper is mainly due to the weakness in the dollar,” said Naeem Aslam, chief market analyst at Ava Trade, adding that there might be some caution ahead of U.S. non-farm payrolls data due on Friday.

Traders said copper prices also were supported by a fire at Mongolia’s Oyu Tolgoi copper mine, which has been brought under control. The impact on production was not immediately known.

Uncertainty about the outlook for copper demand from top consumer China, where economic growth has been slowing and the property sector cooling, has prevented prices from registering stronger gains, analysts said.

China cut benchmark interest rates for the first time in two years last week in an attempt to jumpstart the economy, giving metals prices a boost.

“There is still optimism that the Chinese bank will trigger further stimulus, and if that does take place, it could be positive news for metals,” Aslam added.

In other metals, nickel was the biggest mover, surging 3.2 percent to close at $17,125 a tonne, the highest in over two months as investors became more certain that Indonesia would keep its ban on ore exports, analysts said.

Aluminium gained 1.1 percent to finish at $1,994.50 a tonne, while lead rose 0.6 percent to $2,040 and tin dipped 0.2 percent to end at $20,405.

Zinc failed to trade in official rings and was last bid at $2,237 a tonne, up 1 percent.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin (Additional reporting by Jim Regan in Sydney; Editing by Michael Urquhart and Jane Baird)

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