* Copper market focuses on labour negotiations in Chile
* Traders watching large holdings of LME copper and tin (Updates with closing prices)
By Pratima Desai
LONDON, July 31 (Reuters) - Copper prices climbed on Tuesday as the market took heart from a report that the United States and China are looking to resolve trade differences, while labour negotiations at major producer Codelco helped lift sentiment.
Traders said sentiment had improved and copper reversed early losses after the New York open as the Bloomberg report, unverified by Reuters, filtered through the market.
Benchmark copper on the London Metal Exchange ended up 0.8 percent at $6,300 a tonne.
"The possibility of disruptions in Chile is significant and Chinese authorities loosening policy could mean we start to see some support coming through," Capital Economics analyst Caroline Bain said.
However, copper prices are down about 4.7 percent so far this month, which would mark their steepest monthly fall since December 2016 partly due to fears of a China-U.S. trade war.
CHINA: Copper prices came under pressure earlier on Tuesday after data showed growth in China's manufacturing sector slowed more than expected in July, as the trade dispute, bad weather and weaker domestic demand weighed on factory activity.
China's official Purchasing Managers' Index (PMI) released on Tuesday fell to 51.2 in July from 51.5 in June and below the 51.3 in a Reuters poll of economists.
CHUQUICAMATA: Workers at Codelco's Chuquicamata copper mine in Chile, the state miner's second largest by output, walked off the job on Monday and blocked access to the mine, union leaders said, in a move criticised as "illegal" by Codelco.
ESCONDIDA: The union at BHP's Escondida mine in Chile, the world's largest copper deposit, is expected overwhelmingly to reject the final contract offer from the Anglo-Australian miner, increasing the likelihood of a strike, a union leader told Reuters on Monday.
Union members have until Wednesday to finish voting on the company's proposal, when the union will conduct an official count. After that, either party can call for government-mediated arbitration that could last up to 10 days.
ZINC: Traders are watching a large holding of zinc warrants and cash contracts between 50 and 79 percent, which potentially means nearby tightness on the LME market.
It is one reason why the premium for the cash over the three-month contract rose above $60 a tonne on Monday, its highest since October last year. It was last at $50 a tonne.
TIN: Also in focus is a large tin position holding between 50 and 79 percent of cash contracts and warrants, which could see the premium for the cash over the three-month contract rise further towards the highs of $260 a tonne seen in January.
The premium is currently around $120 a tonne. CMSN0-3
PRICES: Aluminium was down 0.6 percent at $2,081, zinc rose 2.7 percent to $2,626, lead gained 0.1 percent to $2,154.5, tin added 0.3 percent to $20,080 and nickel climbed 1.2 percent to $14,030.
Reporting by Pratima Desai Editing by Dale Hudson and Mark Heinrich