METALS-London copper rises, but volatility fears linger

By Hongmei Li

SINGAPORE, June 12 (Reuters) - London copper prices rose on Thursday, although the market expects volatility amid persistent uncertainty over the U.S-China trade deal.

Three-month copper on the London Metal Exchange CMCU3 was up 0.4% at $9,683.5 per metric ton by 0706 GMT, while the most-traded copper contract on the Shanghai Futures Exchange SCFcv1 lost 0.7% to 78,610 yuan a ton ($10,947.40).

"LME and SHFE copper prices have been diverging as China's domestic demand for copper has shown signs of seasonal weakening, while LME is being supported by possible U.S. tariffs on copper imports," a Hangzhou-based metals analyst said.

Copper inventories in SHFE-registered warehouses are building up but at a slow pace, which is unlikely to pressure SHFE prices too much, she said.

SHFE copper inventories CU-STX-SGH rose to 107,404 tons in the week ended June 6, from 98,671 tons in the week ended May 23.

The U.S. and China reached agreement on Tuesday that restores a trade truce, removing Beijing's export curbs on rare earths and allowing Chinese students access to U.S. universities, although markets remain cautious about further developments.

Meanwhile, the dollar slid after U.S. inflation rose less than expected in May, suggesting the Federal Reserve could cut rates soon.

A weaker dollar typically supports metal prices by making them more attractive to buyers using other currencies.

Among other LME metals, zinc CMZN3 added 0.5% to $2,666 per ton, lead CMPB3 gained 0.4% to $1,995.5, aluminum CMAL3 advanced 0.2% to 2,521.5, while nickel CMNI3 fell 0.2% to $15,140, and tin CMSN3 inched 0.1% lower to $32,630.

Among SHFE metals, aluminium SAFcv1 gained 1.1% to 20,395 yuan a ton, zinc SZNcv1 rose 0.3% to 22,085 yuan, lead SPBcv1 gained 0.3% to 16,890 yuan, while nickel SNIcv1 fell 1.2% to 120,000 yuan.

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DATA/EVENTS (GMT)

1230 US Initial Jobless Clm Weekly

1230 US PPI Machine Mfg May

1600 US Federal Reserve issues Quarterly

Financial Accounts of the United States

($1 = 7.1807 Chinese yuan)

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