* Copper cash to threes discount narrows
* Lead cancelled warrants at 50 percent (Adds closing prices)
By Pratima Desai
LONDON, July 9 (Reuters) - Copper rallied on Monday alongside equities as worries about economic growth receded, but an escalating trade dispute between the United States and China is expected to cap prices.
Benchmark copper on the London Metal Exchange ended up 1.7 percent at $6,390 a tonne. Prices of the metal used widely in power and construction last week touched $6,221.50, the lowest since July 2017.
"Trade rhetoric from the U.S. administration continues to upset risk sentiment and this has been reflected in the downward trend in copper prices in June and early July," analysts at Wood Mackenzie said.
GROWTH: Positive job data in the United States last Friday reassured investors who have yet to witness an actual slowdown due to the implementation of higher trade barriers.
TARIFFS: The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, imposing tariffs on $34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.
CHINA: Recent data from China show growth may be slowing due to tighter credit conditions and softer domestic demand ranging from government-funded infrastructure investment to consumer spending.
CONSUMPTION: Global copper consumption is estimated at around 24 million tonnes this year, with China accounting for about half of that.
DOLLAR: A lower U.S. currency helped to support industrial metals as this makes dollar-denominated commodities cheaper for holders of other currencies. This relationship is used by funds to generate buy and sell signals from numerical models.
HOLDINGS: Large holdings of LME copper warrants and cash contracts have fuelled concern about nearby supplies.
This has seen the discount for the cash over the three-month contract narrow to around $3 a tonne from near $50 a tonne in the middle of April.
ESCONDIDA: The copper market is watching labour negotiations at BHP Billiton's Escondida copper mine in Chile, the world's largest, before a 30-month contract expires at the end of July.
POLLUTION: China's three-year action plan to curb air pollution by 2020 has extended its reach into cities where the problem is worsening.
"Large smelting capacity for copper, zinc and lead is located in the target area and will need to either upgrade to meet new emission norms or face production curbs," Wood Mackenzie analysts said.
"Cost pressure will likely increase. Our analysis on copper smelters shows up to 2.6 million tonnes a year capacity could be affected."
LEAD: Cancelled warrants - metal earmarked for delivery and so no longer available - at 130,600 tonnes or more than 50 percent of lead stocks have created worries about shortages of the battery material on the LME market. MPBSTX-TOTAL
PRICES: Aluminium rose 2.0 percent to $2,121 a tonne, zinc slipped 1.1 percent to $2,705, lead gained 0.3 percent to $2,339, tin was up 1.7 percent at $19,645 and nickel added 1.9 percent to $14,215.
Editing by Mark Potter, Louise Heavens and David Stamp