* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices)
By Eric Onstad
LONDON, Aug 19 (Reuters) - Aluminium touched its highest in more than two weeks on Monday and copper also rose after China unveiled interest rate reforms that could boost the economy of the top metals consumer.
The move by China, which also fuelled hopes of interest rate cuts, triggered short-covering and came on top of fears of aluminium shortages because of flooding in Shandong province in China, a big producer of the metal, traders said.
The Chinese rate reform announced on Saturday is designed to steer borrowing costs lower for companies to support the slowing economy.
"We can see the market is responding (to China's moves); bond yields are trading a tad higher, stocks are higher and it's creating short-covering in base metals," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"In copper, the fact that we hit a record short two weeks ago and then had a failed break to the downside, that does inject some hesitation in people getting aggressively short at these levels."
Benchmark aluminium on the London Metal Exchange rose 0.1% to $1,794 a tonne in final open-outcry trading, having earlier touched $1,807.50, its highest since July 31.
LME three-month copper added 0.5% to finish at $5,774 a tonne.
* U.S.-CHINA TRADE: U.S. Commerce Secretary Wilbur Ross on Monday said the U.S. government will extend a reprieve given to Huawei Technologies that permits the Chinese company to buy supplies from U.S. businesses, even though nearly 50 of its units were being added to a U.S. economic blacklist.
* ALUMINIUM: Investors remain concerned about potential disruption from flooding in China's eastern province of Shandong, the smelting heartland of the country, broker Marex Spectron said in a note.
The floods followed typhoon Lekima, which struck last week, causing billions of dollars of economic losses.
China Hongqiao Group, the world's biggest aluminium producer, said on Aug. 13 that it was operating as normal after the typhoon lashed its home province.
* TIN: LME tin shed 0.6% to end at $16,475, its lowest since June 2016, while Shanghai tin dropped as much as 3.1% to near a seven-week low after stocks surged 33% in LME warehouses in one day, data showed on Friday. MSNSTX-TOTAL
"The down move (in tin) is now over-extended and we would tighten up stops/lighten up short positions," Commerzbank technical analyst Karen Jones said in a note.
* NICKEL SPREAD: The premium of LME cash nickel over the three-month contract CMNI0-3 eased from a decade-high of $40 a tonne last week to $30 a tonne on Monday, suggesting nearby supply tightness has eased but the market is still relatively tight.
* PRICES: LME zinc closed little changed at $2,262 a tonne, lead gained 0.7% to $2,054 and nickel lost 1.7% to $15,920.
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($1 = 7.0449 Chinese yuan)
Additional reporting by Mai Nguyen in Singapore Editing by David Holmes and David Goodman