METALS-Copper hits fresh high on fund buying despite fading Iran peace hopes

By Eric Onstad

LONDON, May 12 (Reuters) - Copper prices edged to a three-month peak on Tuesday as funds bet on further gains due to supply issues and bullish technical signals, largely ignoring worries about the lack of progress in ending the Iran war.

Benchmark three-month copper CMCU3 on the London Metal Exchange gained 0.6% to $14,022 a metric ton by 1600 GMT, its highest in more than three months, after posting a record close on Monday.

Hopes for a peace deal on Iran faded on Tuesday after U.S. President Donald Trump said the ceasefire with Iran was "on life support."

"Metals paused overnight and drifted amid that macro weight," said Alastair Munro, senior base metals strategist at broker Marex.

"But since the London open, a systematic bid has emerged on likes of copper, aluminium and zinc," he added, referring to funds that use computer-driven models.

Bullishness over an AI boom that is expected to require large amounts of copper for data centres helped offset any worries about weaker demand from an extended Middle East conflict, Munro added.

LME copper broke above key technical levels in recent sessions as it moved closer to its intraday record high of $14,527.50 hit on January 29.

The most-active copper contract SCFcv1 on the Shanghai Futures Exchange closed 2.1% higher at 105,510 yuan ($15,528.28) a ton.

Also supporting copper were power issues in Peru, the world’s third-largest copper producer, which authorised state-run Petroperu PETROBC1.LM to seek $2 billion in state-backed loans to sustain operations.

Expectations that China’s refined copper imports could rise in the second quarter also helped prices.

LME zinc CMZN3 gained 1.5% to $3,532 a ton, its strongest since January 29, and lead CMPB3 added 0.4% to $1,995 after Kazzinc said its zinc and lead plants in eastern Kazakhstan were operating at reduced capacity after an explosion last week.

Aluminium CMAL3 lost 0.3% to $3,568.50 a ton, nickel CMNI3 dropped 1.6% to $18,955 and tin CMSN3 slid 1.9% to $54,665.

($1 = 6.7947 Chinese yuan renminbi)