METALS-Copper set for 3% monthly gain on interest rate and demand hopes

By Polina Devitt

LONDON, Aug 29 (Reuters) - Copper prices hit a five-week high on Friday, on track to end August with 3% growth, on expectations of a cut to U.S. interest rates and increased demand in September.

Three-month copper CMCU3 on the London Metal Exchange rose 0.6% to $9,875 a metric ton in official open-outcry trading after touching its highest since July 25 at $9,917.

"Part of it is because the dollar is a bit weaker. But there has also been some strong data recently, such as upward revision of U.S. second-quarter GDP growth," said Dan Smith at Commodity Market Analytics.

"We are also heading for September, which tends to be a better month for demand than the summer period."

The U.S. currency was poised for a monthly retreat of 2% in August, making dollar-priced metals more attractive for buyers using other currencies. FRX/

In top metals consumer China, meanwhile, the yuan will register its biggest monthly gain against the dollar since May.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 2.4% this week while the Yangshan copper premium SMM-CUYP-CN, which reflects demand for copper imported into China, stabilised at $55 a ton, its highest since June 5.

In other LME metals, aluminium CMAL3 rose 0.4% to $2,615 a ton in official activity, zinc CMZN3 added 1.2% to $2,814, lead CMPB3 gained 0.1% to $1,986 and nickel CMNI3 was up 0.7% at $15,375.

Tin CMSN3 advanced 1.5% to $35,325 after touching $35,390 for its highest in almost five months. Stocks in LME-registered MSNSTX-TOTAL and Shanghai-monitored SN-STX-SGH warehouses are low, while market supply of tin ore is tight because Myanmar's Wa State has yet to resume production, Marex said.

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