METALS-Copper hits 10-week high on brightening demand picture
* Zinc hits 5-mth highs; most other metals also firm
* Mongolia parliament may consider approving copper mine expansion
* Coming up: U.S. housing starts/building permits at 1230 GMT
(Updates prices) SINGAPORE, Aug 16 (Reuters) - London copper hit a 10-week high on Friday and was set for its third straight weekly gain on expectations that a global economic recovery is taking root which will drive demand. An initial fall in the dollar also helped by making the metal cheaper for holders of other currencies to buy. Copper prices have rallied more than 7 percent in August, rebounding from three-year lows hit in June, on signs of resilience in China's economy, Europe exiting recession and the U.S. recovery slowly gaining steam. Friday's gains were stoked by dollar weakness, said Alexandra Knight of National Australia Bank in London. "While the dollar stays weak, that should offer some support to metals, but as the U.S. economy gains momentum we see the dollar strengthening," she said. "We're not seeing a potential resurgence in copper prices any time soon." Copper prices are still down nearly 7 percent this year. Three-month copper on the London Metal Exchange struck the highest since June 6 at $7,420 a tonne, before easing to $7,404.50 by 0704 GMT, still up 1.29 percent on the day. Copper's advance fed into gains across the complex with most metals gaining more than 1 percent: zinc struck a five-month high, while lead, aluminium and nickel scaled peaks last seen in June. The most-traded December copper contract on the Shanghai Futures Exchange climbed 1.68 percent to 53,130 yuan ($8,700) a tonne. It earlier touched its highest since May 22 of 53,240 yuan a tonne. Concerns about a recent outflow from U.S. debt added to pressure on the dollar. The latest Treasury International Capital (TIC) data showed foreign investors sold long-term U.S. securities for a fifth straight month in June, undermined by U.S. Treasury outflows that were the largest on record.
But the dollar reversed early losses to firm up in subdued Asian trade on Friday after uncertainty about the U.S. Federal Reserve's stimulus withdrawal, but metals held their gains. The uncertainty was in part triggered by a brightening U.S. labour market which could draw the Federal Reserve closer to trimming its massive bond-buying programme.
RECOVERY IN EUROPE Reflecting growing recovery in Europe that bodes well for metals demand, Germany could overtake the United States to become the world's second-biggest exporter this year, the German chambers of commerce said on Thursday. Elsewhere, Mongolia is considering an emergency session of parliament to stave off an economic crisis, in a move that could accelerate the approval of financing for a $5 billion expansion to global miner Rio Tinto's giant Oyu Tolgoi gold and copper mine. Zinc prices rallied to five-month highs of $1,990 a tonne, the highest since March 15, as imports to China pick up this year and after a close above the 200-day moving average sparked chart-based buying, traders said. PRICES Base metals prices at 0704 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 7404.50 94.50 +1.29 -6.61 SHFE CU FUT DEC3 53130 880 +1.68 -7.89 HG COPPER SEP3 3.37 0.04 +1.08 -99.08 LME Alum 1918.00 11.00 +0.58 -7.39 SHFE AL FUT NOV3 14475 50 +0.35 -5.67 LME Zinc 1981.25 21.25 +1.08 -3.99 SHFE ZN FUT NOV3 15170 -375 -2.41 -2.41 LME Nickel 14930.00 205.00 +1.39 -12.97 LME Lead 2230.00 25.00 +1.13 -4.70 SHFE PB FUT 14910.00 320.00 +2.19 -2.23 LME Tin 21813.00 223.00 +1.03 -6.78 LME/Shanghai arb^ -281
Shanghai and COMEX contracts show most active months ($1 = 6.1125 Chinese yuan)
(Editing by Joseph Radford and Muralikumar Anantharaman)