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METALS-Zinc near three-month high on falling stocks, higher steel prices

(Updates throughout, changes SYDNEY dateline) LONDON, June 27 (Reuters) - Zinc touched a near three-month high on Tuesday as the dollar lost its luster, exchange stockpiles fell and expectations of stronger demand from Chinese steelmakers rose. Benchmark zinc on the London Metal Exchange rose 0.7 percent to $2,737 per tonne at 1104 GMT. Earlier the metal used to galvanize steel hit $2,750 per tonne, its highest since April 7. "Fundamentally zinc is very strong," Sucden Financial analyst Kash Kamal said, adding that the technical picture also suggested further upside for zinc prices.

STEEL: Chinese iron ore prices surged 6 percent to one-month highs in a late burst of short covering and fresh buying that lifted steel and raw materials as investors bet on rising demand. STOCKS: Cancelled warrants -- zinc earmarked for delivery -- at more than 70 percent of LME stocks at 299,875 tonnes are fueling concern about a tight LME market. Total stocks at eight-year lows are also down 35 percent since October. <MZNSTX-TOTAL> CHINA ZINC: Premiums for zinc held in China's bonded zones are near their highest levels this year at $195-$200 from about $130 earlier this year. <ZN-BMPBW-SHMET> ZINC SPREAD: The discount for cash over the three-month contract has narrowed to near zero from around $20 a tonne on June 12, another sign of a tighter LME market. <CMZN0-3> TECHNICALS: Resistance for zinc is around $2,770, a Fibonacci level, said Marex Spectrons's Alastair Munro.

NICKEL: LME nickel rose 1.2 percent to $9,130, on

track for its best highest percentage gain in a week. PHILIPPINES MINING: The nickel market is watching the Philippines where the environment minister may decide next month on the fate of dozens of mining operations and contracts that his predecessor ordered closed, suspended or canceled. JAPANESE ALUMINIUM: Japanese aluminum buyers have agreed to pay producers a premium of $118 to $119 per tonne for metal shipped during the July to September quarter, five sources directly involved in the pricing talks said. DOLLAR: Industrial metals were helped overall by a softer U.S. currency, which makes dollar-denominated metals cheaper for non-U.S. firms when it falls, potentially boosting demand.

LME COPPER: Copper added 0.4 percent to $5,817 a

tonne, rising for the first session in five and headed for its best month since January.

ALUMINIUM: Benchmark aluminum rose 0.6 percent to

$1,874, rebounding after touching its lowest in over three months on Monday.

PRICES: Tin was a touch lower at $19,275 and lead

rose 0.8 percent to $2,272.

(Additional reporting by James Regan in Sydney; Editing by Edmund Blair)