METALS-LME copper rises as improving Chinese industrial profits counter dollar pressure

By Lucas Liew

Aug 28 (Reuters) - Three-month copper on the London Metal Exchange gained on Thursday, as signs of improving profitability among China's industrial firms outweighed pressure from a stronger U.S. dollar.

Three-month copper on the London Metal Exchange CMCU3 rose 0.42% to $9,796.5 per metric ton by 0701 GMT, while the most-traded copper contract on the Shanghai Futures Exchange SCFcv1 eased 0.53% to 78,930 yuan ($11,034.69) a ton.

A stronger dollar weighed on investor appetite, but signs that efforts to curb overcapacity were starting to ease the strain on industrial firms from aggressive competition capped losses, ANZ analysts said.

Profits at China's industrial firms declined by 1.5% year-on-year in July, marking a notable improvement from the 4.3% slump recorded in June.

Meanwhile, the dollar index =USD, which measures the currency against six major peers, remained steady at 98.145 after two consecutive days of declines, as markets monitored the possibility of a Federal Reserve interest rate cut next month.

A stronger U.S. dollar makes greenback-priced metals more expensive for holders of other currencies, hurting demand and weighing on prices.

With the off-season ending, downstream demand is expected to gradually recover, said broker Everbright Futures.

However, the 1,000-ton increase in inventories to 156,000 tons in LME-registered warehouses added pressure.

Among other London metals, aluminium CMAL3 rose 0.61% to $2,618.5 a ton, nickel CMNI3 gained 0.39% to $15,190, lead CMPB3 climbed 0.38% to $1,992, tin CMSN3 added 0.25% to $34,640 and zinc CMZN3 advanced 0.56% at $2,777.

SHFE aluminium SAFcv1 fell 0.48% to 20,750 yuan, nickel SNIcv1 lost 0.69% to 120,990 yuan, lead SPBcv1 eased 0.03% to 16,910 yuan and zinc SZNcv1 shed 0.81% to 22,170 yuan. Tin SSNcv1 rose 0.44% to 272,680 yuan.

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