METALS-Copper falls on a stronger dollar, signs of easing demand

By Polina Devitt and Ashitha Shivaprasad

June 6 (Reuters) - Copper prices fell on Friday as the dollar strengthened and the yuan weakened, while continued outflows from stocks in the warehouses registered with the London Metal Exchange and concerns about short-term supply capped losses.

The three-month copper contract on the LME CMCU3 lost 0.5% to $9,686.50 per metric ton by 1613 GMT.

The metal, used in power and construction, hit $9,809.50, its highest in more than two months, on Thursday as a phone call between U.S. President Donald Trump and Chinese leader Xi Jinping raised hopes that further talks would help ease trade tensions between the world's two largest economies.

However, the pressure on copper and other growth-dependent metals returned on Friday as the dollar rose after data showed better-than-expected U.S. jobs growth, and the yuan in the world's top metals consumer China fell to a two-year low with the key issues between Washington and Beijing unresolved.

Another layer of pressure came from the demand side with data showing that the Yangshan copper premium SMM-CUYP-CN, a gauge of China's appetite to import copper, fell 48% from Thursday to $41 a ton, its three-month low. It peaked at its multi-month-high of $103 in early May.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange CU-STX-SGH continued recovering after the last month's slump with a 1.5% growth this week.

In the LME system, concerns about the nearby supply due to falling stocks in LME-registered warehouses inflated a premium for nearby contracts against those with longer maturities, with the market awaiting a result of Washington's investigation on potential import tariffs on copper.

Among other metals, LME aluminium CMAL3 fell 1.2% to $2,448 a ton.

The aluminium premium for U.S. physical market buyers AUPc1 soared this week after Trump imposed higher tariffs on U.S. imports of the metal and ended Friday at a record $0.625 a lb or $1,378 a metric ton.

LME zinc CMZN3 was down 0.9% at $2,663, lead CMPB3 was steady at $1,978, tin CMSN3 dropped 0.8% to $32,270 and nickel CMNI3 lost 0.3% to $15,460.

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