METALS-Copper up on bargain hunting, supply tightness after hitting 2-week low


* LME/ShFE arb - http://tmsnrt.rs/2oQ5nm2 (Recasts, adds official midday prices)

LONDON, June 21 (Reuters) - Copper edged up on Wednesday amid signs of tightening supply, a softer dollar and as investors went bargain hunting to take advantage of the metal's fall to a near two-week low earlier in the day.

The dollar dipped versus a currency basket after touching a five-week peak on Tuesday, while oil prices steadied having fallen to seven-month lows, on course for their largest price slide in the first half of any year for the past two decades.

A strong dollar makes dollar-priced metals costlier for non-U.S. investors while sliding oil prices can deter investors from commodity basket funds that include metals. They also reduce costs for miners and smelters.

"A lot of (the decline) has to do with broader commodity market correlations... (and) the Federal Reserve being more hawkish," said Nitesh Shah, commodity strategist at ETF Securities.

He added, however: "The fundamentals look pretty strong. There's likely going to be a deficit this year. The (supply) issues we saw in the beginning of the year with Grasberg and Escondida haven't been resolved ...they will resurface."

* LONDON COPPER: Three-month copper on the London Metal Exchange was last bid up 0.3 percent in official midday rings at $5,675 a tonne, having hit its lowest since June 8 at $5,630.

* COPPER SUPPLY: The global world refined copper market showed a 5,000 tonnes deficit in March, compared with a 102,000 tonnes surplus in February, industry data showed on Tuesday.

* ALUMINIUM: Aluminium was last bid down 0.7 percent in rings at $1,873.

"A large part of the potential production cuts in China should already be priced (in). Aluminium has outperformed all other base metals (this year), despite what we see as an amply supplied market," Commerzbank said in a note.

* ZINC: Zinc traded up 1.3 percent to $2,588, having touched its highest since June 1 earlier at $2,598, bolstered by concerns over tightening supplies, though these have been offset somewhat by worries over Chinese steel demand.

* NICKEL: LME nickel traded up 1.3 percent at $8,930, following a 2.1 percent slide on Tuesday that came despite news earlier in the week that about a dozen Indonesian nickel smelters had stopped operations because of a plunge in prices.

* OTHER METALS: Tin traded up 0.1 percent at $19,520 while lead was last bid up 0.9 percent at $2,146.

* For the top stories in metals and other news, click TOP/MTL or MET/L ($1 = 6.8318 Chinese yuan)

(Additional reporting by James Regan; Editing by Elaine Hardcastle and Susan Thomas)