METALS-Copper edges higher on worries about US debt, softer dollar

By Eric Onstad

LONDON, May 21 (Reuters) - Copper prices edged higher on Wednesday as investors spooked by growing U.S. debt levels looked for hard assets as the dollar weakened.

Benchmark three-month copper CMCU3 on the London Metal Exchange (LME) was up 0.1% at $9,528 a metric ton by 1615 GMT.

Republicans in the U.S. House of Representatives are trying to overcome internal divisions about President Donald Trump's tax cut and spending bill, which would extend his 2017 tax cuts.

Credit-rating firm Moody's last week stripped the U.S. government of its top-tier rating, citing the nation's growing debt.

"The fiscal debt story is one that's not only underpinning gold, platinum and silver, but also copper and simply tangible assets in general," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"This tax cut in the U.S., if extended, would basically dig an even bigger hole in their budget, making it even riskier to hold U.S. bonds."

Copper touched its strongest price in six weeks last week at $9,664, bolstered by a 90-day pause agreed by China and the U.S. on most of their tit-for-tat tariffs, but that optimism was fading, Hansen added.

"It's not really an inspirational market right now. I think we are most certainly in a wait-and-see mode, so that could cap the upside in the short term."

The most-traded copper contract on the Shanghai Futures Exchange rose 0.3% to 78,100 yuan ($10,839) per ton.

The U.S. dollar fell on Wednesday, extending a two-day slide against major peers, making greenback-priced commodities less expensive for buyers holding other currencies. USD/

"Technically, copper has found strong support at $9,500 per ton, and in the near term, prices are targeting the $9,950 per ton mark, barring any significant negative macroeconomic surprises," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

Lead CMPB3 slipped 0.4% to $1,973.50 a ton after on-warrant LME inventories soared by 75% to 216,175 tons. MPBSTX-TOTAL

Among other metals, LME aluminium CMAL3 added 0.2% to $2,475.50 a ton and nickel CMNI3 gained 0.8% to $15,645 while zinc CMZN3 gave up 0.7% to $2,690.50 and tin CMSN3 fell 0.6% to $32,900.

($1 = 7.2055 yuan )