×

METALS-Copper hits 4-1/2 month high on China growth, weak dollar

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2 (Recasts, updates prices, adds details/quote; changes dateline)

LONDON, July 21 (Reuters) - Copper hit a 4-1/2 month peak on Friday, fuelled by strong growth in top copper consumer China, a weak dollar and worries about supply disruptions.

The dollar hit a two year low versus the euro, as the single currency rallied on bets the European Central Bank would tweak its policy stimulus in the autumn.

A weaker dollar makes dollar-priced copper cheaper for non-U.S. investors.

Also helping copper, China's economy expanded faster-than-expected in the second quarter, data showed Monday, setting the country on course to comfortably meet its 2017 growth target.

"Overall demand in China is not that bad at all," said Richard Fu, head of Asia and Pacific at LME Floor Member AMT.

"In general global economic figures are improving, theres supply disruptions here and there, plus the Chinese want to cut metal production in order to tackle pollution and over-capacity," he added.

FUNDAMENTALS

* LME COPPER: Three-month LME copper rose 1.17 percent to $6,028 a tonne by 0956 GMT, having earlier hit its highest since March 1 at $6,042.50.

* INVENTORIES: Copper inventories in Shanghai Futures Exchange-monitored warehouses fell 4.9 percent from last Friday to their lowest since January.

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

* WAGE TALKS: Union-represented workers and management at Antofagasta's Zaldivar copper mine failed to reach a wage deal on Thursday and agreed to extend government-mediated talks into next week.

* COPPER DEFICIT: The global world refined copper market showed a 53,000 tonnes deficit in April, compared with an 18,000 tonnes deficit in March, industry data showed.

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

* ALUMINIUM OUTPUT: Daily average primary aluminium output excluding China rose to 70,300 tonnes in June, from 70,000 tonnes in May, industry data showed.

"Although sweeping production cuts were announced in recent months, especially in China, they have not been implemented so far or have been offset by new capacities. We see no justification for the high aluminium price," said Commerzbank in a note.

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

* 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, fuelling doubts that President Donald Trump can deliver promised economic stimulus that would boost demand for metals.

(Additional reporting by James Regan; Editing by Elaine Hardcastle)