METALS-Copper steadies as tariff uncertainty counters weaker dollar, China stimulus

By Ashitha Shivaprasad

May 20 (Reuters) - Copper prices steadied on Tuesday due to support from a weaker dollar and top consumer China's stimulus efforts, but worries about growth and demand due to U.S. tariffs dominated sentiment.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was little changed at $9,520 a metric ton at 1612 GMT.

Last week's trade truce between Beijing and Washington offered temporary relief to the market, but uncertainty looms over what will follow after the 90-day pause.

Focus is also on an ongoing investigation into possible new tariffs on U.S. copper imports, aimed at rebuilding domestic production of the metal critical to electric vehicles, military hardware and semiconductors.

"Investors are concerned at the potential volatility from the... investigation into copper," said SP Angel analyst John Meyer.

The probe has resulted in a price premium for COMEX copper futures against LME contracts, which traders have capitalised on by redirecting copper supplies from other markets to the United States.

Inventories in COMEX-registered warehouses have surged 77% HG-STX-COMEX to above 170,000 tons since the end of March.

Meanwhile, the U.S. dollar remained subdued, supporting prices. A weaker dollar makes metals more affordable to other currency holders. USD/

"The weaker U.S. dollar may be encouraging some small-scale restocking of commodities," said Meyer.

Elsewhere, China cut benchmark lending rates for the first time since October, and major state banks lowered deposit rates to aid the economy as trade war simmers.

"China's problem is not cheaper credit, but a reluctance by consumers and businesses to spend and invest," said Marex consultant Edward Meir.

However, the size of the rate reductions were mild, reflecting a gradual approach to monetary easing.

Among other metals, aluminium CMAL3 rose 1.1% to $2,476 a ton, zinc CMZN3 was up 1.5% at $2,718, lead CMPB3 gained 1% to $1,982, tin > firmed 0.6% to $33,075 while nickel CMNI3 edged down 0.6% to $15,475.