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METALS-London copper eyes biggest drop in six weeks on dlr

MELBOURNE, June 16 (Reuters) - London copper edged up on Friday but was still eyeing its biggest weekly drop since early May as markets priced in a higher U.S. interest rate environment that would support the dollar.

FUNDAMENTALS

* London Metal Exchange copper rose by half a percent to $5,690 a tonne by 0230 GMT, paring small losses from the previous session. Copper is still down 2.1 percent for the week.

* Shanghai Futures Exchange copper was flat at 45,650 yuan ($6,702) a tonne.

* In other metals, zinc and nickel climbed more than 1 percent, trailing steel, after China's government said it was beating its targets for capacity closure.

* Chinese steel futures rose sharply for a third day in a row on Friday, supported by government efforts to tackle a glut, even as the outlook for demand in the world's top steel consumer may not be too promising, particularly from its property sector.

* The number of Americans filing for unemployment benefits fell more than expected last week, pointing to shrinking labor market slack that could allow the Federal Reserve to raise interest rates again this year despite moderate inflation growth.

* Mining giant BHP on Friday named well regarded Australian packaging executive Ken MacKenzie as its next chairman, handing him the challenge of guiding the company amid calls for change.

* CME says the New York Mercantile Exchange Inc. and Commodity Exchange Inc. plans to expand the location for the storage and delivery of zinc delivered against the Zinc Futures contract to Europe and Asia.

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MARKETS NEWS

* Asian stocks were steady on Friday, appearing to take in stride the resumption of the U.S. technology rout overnight, while the dollar held near a two-week high after solid economic data backed the case for tighter U.S. monetary policy.

DATA/EVENTS 0900 Euro zone Inflation final May 0900 Euro zone Labour costs Q1 1230 U.S. Housing starts May 1230 U.S. Building permits May

1400 U.S. Univ of Michigan sentiment index Jun

PRICES

BASE METALS PRICES 0250 GMT Three month LME copper 5685.5 Most active ShFE copper 45660 Three month LME 1880

aluminum

Most active ShFE 13605

aluminum

Three month LME zinc 2532 Most active ShFE zinc 21235 Three month LME lead 2106 Most active ShFE lead 17345 Three month LME nickel 8940 Most active ShFE nickel 73720 Three month LME tin 19425 Most active ShFE tin 145700

BASE METALS ARBITRAGE

LME/SHFE COPPER LMESHFCUc3 455.77 LME/SHFE ALUMINIUM LMESHFALc3 -1274.

72

LME/SHFE ZINC LMESHFZNc3 651.12 LME/SHFE LEAD LMESHFPBc3 -320.8

8

LME/SHFE NICKEL LMESHFNIc3 1981.9

6

($1 = 6.8110 Chinese yuan renminbi)

(Reporting by Melanie Burton; Editing by Richard Pullin)