September 5, 2019 / 10:56 AM / 13 days ago

METALS-Copper rebounds as U.S., China resume trade talks

(Updates throughout, moves dateline from SINGAPORE)

By Peter Hobson

LONDON, Sept 5 (Reuters) - Copper prices rose on Thursday to the highest since Aug. 19 after China and the United States agreed to hold high level trade talks, reviving hopes for an end to a dispute that has weakened global economic growth and consumption of metals.

Benchmark copper on the London Metal Exchange (LME) was up 1% at $5,807 a tonne at 1036 GMT, from a two-year low of $5,518 on Tuesday.

"Trade talks are good news as far as base metals are concerned," said Capital Economics analyst Ross Strachan. "(But) it's not a huge boost because there's still a lot of scepticism that a deal will be reached."

He forecast copper at $5,800 at the end of the year and said supply deficits were likely to push prices higher after that.

TRADE WAR: "Lead negotiators from both sides had a really good phone call this morning," China's commerce ministry said. "We'll strive to achieve substantial progress during the 13th Sino-U.S. high-level negotiations in early October."

MARKETS/YUAN: Global stock markets rallied. The yuan strengthened against the dollar, helping metals by making them cheaper in China, the world's biggest metals consumer.

But Chinese authorities are likely to allow the yuan to weaken further as the country's economy slows, a Reuters poll of strategists showed.

CHINA EXPORTS: China's exports likely rose slightly in August but imports contracted for a fourth straight month, a Reuters poll showed, pointing to further strains on the economy.

GERMAN FACTORIES: German industrial orders fell more than expected in July, data showed, suggesting the country could tip into a recession in the third quarter.

TARIFFS: The U.S. Commerce Department said on Wednesday it imposed duties on Chinese and Mexican structural steel.

ZINC: Cash zinc on the LME has flipped to a $14.50 premium against the three-month contract, pointing to tighter nearby supply. MZN0-3

Benchmark zinc was up 1.7% at $2,349.50 a tonne from a three-year low of $2,190 reached on Tuesday.

NICKEL: The premium for cash nickel over three month metal MNI0-3 fell to $14.50, continuing a rapid fall from ten-year highs.

The benchmark contract was down 2.6% at $17,530 a tonne after news of an ore export ban by top producer Indonesia this week rocketed prices to a five-year high of $18,850.

TIN: LME tin was 1.1% higher at $17,390 a tonne after Yunnan Tin, the world's biggest producer, said it was cutting production as part of a joint action by Chinese smelters in response to tight ore supply.

OTHER METALS: LME aluminium was up 0.2% at $1,778 a tonne and lead was 0.7% higher at $2,065.

Reporting by Peter Hobson; additional reporting by Mai Nguyen; editing by Elaine Hardcastle

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