MELBOURNE, June 13 (Reuters) - London copper eased on Tuesday from near a two-month high ahead of the U.S. Federal Reserve's interest rate decision due later in the week, while China zinc premiums surged on healthy demand and limited supply.
"Zinc demand is good because steel demand in China is great right now. Demand growth is expected to soften in the second half which will weigh on steel demand and likely galvanized demand (for zinc) as well," said analyst Lachlan Shaw at UBS in Melbourne.
"But the story with zinc is about supply. Youre seeing that physical premium jump. Thats a signal and we need to see it sustain. Potentially this is the tightening that many have been expecting - Id be expecting futures to catch up."
* LME COPPER: London Metal Exchange copper traded flat at $5769 a tonne by 0258 GMT, after a small 0.6 percent drop in the previous session.
* TECHNICALS: LME copper has been challenging resistance around the 100-day moving average at $5784 a tonne, having reached $5,832 a tonne on Friday which was its highest since April 10.
* SHFE COPPER: Shanghai Futures Exchange copper slipped 0.6 percent to 46070 yuan ($6,778) a tonne.
* ZINC Premiums for zinc held in China's bonded zones have surged to $195-205 from $155 last week <ZN-BMPBW-SHMET>. Signs of supply stress also showed on the ShFE, where front month prices flaring to more than 2000 yuan above the third month futures contract on Monday.
* U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices.
* A small majority of traders in China's financial markets think its central bank will likely raise short-term interest rates this week if the U.S. Federal Reserve hikes its key policy rate, as widely expected, according to a Reuters poll.
* Disruptions at the two biggest copper mines early this year may have only a muted impact on prices after a surge of scrap metal partially filled the supply gap and a recovery in mine output is due to help in the second half.
* French bank Natixis has sued metals broker Marex Spectron for $32 million over alleged fraudulent receipts for nickel stored at warehouses in Asia run by a unit of commodities giant Glencore GLEN.L, a court filing showed.
* China is likely to step up imports of refined zinc from May, industry sources said last month, as dwindling global supplies of concentrate hit local output of the metal, used to galvanize steel.
* For the top stories in metals and other news, click or
0600 Germany Wholesale prices May
0830 UK CPI May
0830 UK PPI May
0900 Germany Economic sentiment index June
1000 US Small business confidence index May
1230 US PPI May
Three month LME copper
Most active ShFE copper
Three month LME aluminum
Most active ShFE aluminum
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
ARBS ($1 = 6.7970 Chinese yuan renminbi)
(Editing by Vyas Mohan)