METALS-Copper hits 10-week high on improving economic prospects
* Dollar under pressure, but lifts off lows
* Zinc hits 5-month high on increased China imports
* Coming up: US housing starts/building permits at 1230 GMT
LONDON, Aug 16 (Reuters) - Copper hit a 10-week high on Friday, heading for a third week of gains, on expectations that a global economic recovery would increase demand for industrial metals.
Copper has risen more than 7 percent so far this month, rebounding from three-year lows hit in June, on signs of resilience in China's economy, an exit from recession for Europe and a U.S. recovery slowly gaining steam.
Improvement in Europe and elsewhere undercut the perceived relative strength of the U.S. economy, putting some pressure on the dollar. This helped underpin base metals prices, because a weaker dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.
The dollar later lifted off its lows against a basket of currencies.
Three-month copper on the London Metal Exchange hit the highest level since June 6 at $7,420 a tonne, before easing to $7,385 by 1011 GMT, still up 1 percent on the day.
"I think the main support for base metals in the last two trading sessions was a weaker U.S. dollar," Myrto Sokou, senior research analyst at Sucden, said.
"Support has also come from recent U.S. economic data, including employment data, confirming the recovery in the U.S. market. Overall, there are quite solid economic prospects which signal higher demand in the medium term."
The number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July.
This, however, could draw the Federal Reserve closer to trimming its bond-buying programme, which could weigh on demand for metals.
"Clearly one can ascribe many reasons to the recent strength, whether it be better economic data out of China for copper or FX controls in India for gold," Guy Wolf, Marex head of markets analytics, said in a research note.
"Our stance is more simplistic - we are coming off some of the biggest short positions in many years in both of these spheres and until the money flow turns negative, we favour swimming with the tide."
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 prompted chart-based buying, traders said.
LME zinc was $1,988 per tonne from $1,960 at the close on Thursday.
Tin was $21,785 per tonne from $21,590, lead was at $2,234 from $2,205, aluminium was at $1,921 from $1,907, and nickel was at $14,892 from $14,725.