METALS-Copper falls as tariff tensions escalate

By Polina Devitt

LONDON, March 4 (Reuters) - Copper fell on Tuesday as trade war fears resurfaced after U.S. President Donald Trump's tariffs on China, Canada and Mexico, but prices remained in a tight range as the dollar weakened.

Three-month copper CMCU3 on the London Metal Exchange (LME) CMCU3 lost 0.7% to $9,356 a metric ton by 1614 GMT after slipping below the 21-day and 200-day moving averages at $9,411 and $9,392 respectively.

Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%.

Concerns about slowing growth and the impact from tariffs on the U.S. economy pushed the dollar to a three-month low, making dollar-priced metals more attractive for buyers using other currencies. FRX/

China retaliated with increases to import levies for American agricultural and food products, moving the world's top two economies a step closer to an all-out trade war.

"We have two major things on the horizon," said Dan Smith, head of research at Amalgamated Metal Trading.

"There is a prospect of a trade war, which is very bearish for the metals markets, and there is also a prospect of the Ukraine war settlement, which is bullish for the markets as a peace deal would improve confidence in the markets and remove the risk of the war spinning out of control for regions such as Europe.

"People are struggling to trade those two prospects. Usually traders use the 'buy the rumour, sell the fact' strategy, but now they are ignoring the rumour and trade the fact."

Ukrainian President Volodymyr Zelenskiy said on Tuesday that his clash with Trump last week was regrettable, that he was ready to work under the U.S. president's leadership to bring lasting peace and that it was "time to make things right".

On Monday a White House official had said that Trump had paused military aid to Ukraine.

Also supporting base metals was the start of China's National People's Congress (NPC) on Wednesday. Traders hope the NPC will announce additional stimulus to support the economy of the world's top metals consumer.

In other metals, LME aluminium CMAL3 rose 0.1% to $2,614.50 a ton, zinc CMZN3 lost 0.9% to $2,817.50, lead CMPB3 gained 0.4% to $1,999.50, nickel CMNI3 was up 0.6% at $15,990 and tin CMSN3 was down 0.1% at $31,535.