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METALS-China optimism keeps copper near 5-month high

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2 (Updates prices)

LONDON, July 20 (Reuters) - Copper prices held near five-month highs on expectations of solid demand from top consumer China after industrial output expanded strongly in the second quarter, but nickel fell as Chinese steel prices slipped from recent highs.

Benchmark copper on the London Metal Exchange was unchanged at $5,966.50 at 1422 GMT, still close to Monday's high of $6,022.50 - the first rise above $6,000 since March 2.

"There's still a halo effect from the stronger-than-expected Chinese numbers," ETF Securities analyst Nitesh Shah said.

CHINA GROWTH: The Asian Development Bank raised its 2017 and 2018 growth forecasts for China and other countries in the region.

CHINA ECONOMY: However, Fitch Ratings said China's renewed commitment to contain financial risks signals a possible shift away from high economic growth targets.

COPPER STOCKS: On-warrant stocks in LME-registered warehouses remained near the highest since mid-May, falling 50 tonnes to 230,100 tonnes. <MCUSTX-TOTAL>

SPECULATORS: "Net long positions in lead, copper, nickel and zinc are as much as 45 percent above the average," analysts at Commerzbank wrote in a note. "This entails the risk of a marked price correction if speculative financial investors choose to turn their backs on base metals."

SPREADS: Discounts of cash copper, aluminum and lead to their three-month contracts were at multi-year highs, signaling ample nearby supply. <MCU0-3> <MAL0-3> <MPB0-3>

NICKEL: Stainless steel ingredient nickel was down 0.8 percent at $9,570 after Chinese rebar and iron ore futures slipped following a 25-percent rally. Nickel was just above its technically important 100-day moving average.

DOLLAR: The dollar fell towards a 14-month low against the euro after European Central Bank chief Mario Draghi said policymakers would discuss possible changes to its bond-buying scheme in the autumn.

U.S. ECONOMY: Jobless claims fell more than expected to the lowest level in nearly five months, suggesting strong job gains that should continue to underpin economic growth.

TRUMPCARE: Republicans failed to resolve differences on healthcare legislation, fueling doubts that President Donald Trump can deliver promised economic stimulus that would boost demand for metals.

CHINA-U.S. TRADE: The United States and China failed to agree on major new steps to reduce the U.S. trade deficit with China.

PERU STRIKES: Unionised workers in Peru, the world's second-biggest copper producer, began a nationwide strike to protest against labor reforms, but significant disruptions to output were not expected.

ALUMINIUM: Daily average output from China rose to a record 97,700 tonnes in June while ex-China production also rose. Benchmark aluminum was flat at $1,920 a tonne.

PRICES: Lead was up 0.3 percent at $2,223.50, tin was flat at $20,090 and zinc was 0.3 percent lower at $2,738.

(Additional reporting by Melanie Burton in Melbourne; Editing by Dale Hudson and David Evans)