METALS-Copper rallies to four-month high on soft dollar, Trump rollback

By Eric Onstad

LONDON, March 6 (Reuters) - Copper prices extended gains on Thursday to their highest levels in four months on a slide in the dollar and after U.S. President Donald Trump granted automakers a temporary exemption from tariffs.

Three-month copper on the London Metal Exchange CMCU3 gained 1.2% to $9,703 a metric ton by 1715 GMT, its highest level since November 5 last year, after jumping by 2.6% a day earlier.

It extended gains in European afternoon trading after the dollar index .DXY deepened losses, having already touched four-month lows, making greenback-priced commodities cheaper for buyers holding other currencies. USD/

A Federal Reserve official said on Thursday that trouble may be brewing for the U.S. economy.

Earlier, metals got a boost after Trump carved out a one-month exemption on Wednesday for the metals-intensive auto sector from 25% tariffs slapped on Canada and Mexico.

"It has helped most metals because it gives them a little bit more time to be used in cars without facing the immediate tariffs and maybe also demonstrates some flexibility," said Nitesh Shah, commodity strategist at WisdomTree.

The most-active copper contract on the Shanghai Futures Exchange SCFcv1 gained 1.6% to 78,310 yuan ($10,813.31) a ton, a level not seen in more than two weeks.

On the U.S. Comex exchange, most-active May copper futures HGc3 rose 0.5% to $4.82 a lb as investors adjusted their expectations of tariffs Trump may impose on copper.

Trump has announced 25% tariffs on aluminium and steel imports from March 12 and has ordered a probe into possible new tariffs on copper.

The premium of Comex over LME copper narrowed to $885 per ton from $984 on Wednesday.

Gains in industrial metals were capped after investors digested news coming out of China's National People's Congress this week.

The NPC resulted in pledges for more fiscal stimulus and a focus on boosting consumer spending, but the immediate steps unveiled to boost household demand underwhelmed economists.

LME aluminium CMAL3 gained 1.4% to $2,696.50 a ton, zinc CMZN3 advanced 1.8% to $2,930, lead CMPB3 added 0.6% to $2,045.50, nickel CMNI3 climbed 2.4% to $16,280 and tin CMSN3 jumped 3% to $32,650.

Lead touched its highest in nearly three months while nickel hit its strongest in almost four months.

($1 = 7.2420 yuan )