METALS-Copper hits one-week high on Chinese buying, hopes for trade deal

By Eric Onstad

LONDON, July 18 (Reuters) - Copper climbed to its strongest in more than a week on Friday, driven by Chinese buyers, hopes for a U.S.-China trade deal, and higher risk appetite among other investors.

Three-month copper on the London Metal Exchange CMCU3 gained 1.1% to $9,777 per metric ton by 1600 GMT, its highest since July 8.

LME copper has eased from its three-month peak of $10,200.50, hit on July 2, and Chinese participants are buying on dips, Marex senior base metals strategist Alastair Munro said.

"Add to that chatter on wires around a potential U.S.-Sino trade agreement in months ahead...The surprise remains on the topside."

China's commerce minister said on Friday the country, the world's biggest metals consumer, wants to bring its trade ties with the U.S. back to a stable footing.

Hopes for more metals-intensive economic support were buoyed after an official with the industry ministry said China would issue action plans to stabilise growth in the machinery, autos, and electrical equipment sectors.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 0.7% to 78,410 yuan ($10,922.74) a ton.

"LME copper stocks have been rising, mainly at its Asia warehouses as some traders may be betting on more buying by China with recent price drops," a Shanghai-based metals analyst at a futures company said.

Also supporting the market was higher risk appetite among investors in general as stock markets moved higher, and a weaker dollar .DXY. MKTS/GLOB

A softer dollar makes commodities priced in the greenback less expensive for buyers using other currencies.

U.S. Comex copper futures HGc3 climbed 1.6% to $5.60 a lb, bringing the premium of Comex over LME copper to $2,571 a ton.

Nickel CMNI3 was the weakest performing LME metal on rising inventories and weak demand for the metal mainly used to make stainless steel and electric vehicle batteries. It was up 0.8% to $15,215 a ton after earlier sinking into the red.

"We do not expect a near-term demand inflection with stainless run rates falling and low probability of a renaissance of the transformational battery bull case for nickel," UBS analyst Daniel Major said in a note.

LME aluminium CMAL3 rose 2.2% to $2,635 a ton, its strongest in more than three weeks, zinc CMZN3 jumped 3% to $2,819, lead CNPB3 gained 1.9% to $2,010 and tin CMSN3 rose 1.2% to $33,415.

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($1 = 7.1786 Chinese yuan)

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