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METALS-Copper hovers near highest in more than two years

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

LONDON, July 27 (Reuters) - Copper rose on Thursday, hovering near two-year highs hit in the previous session, as investors bet the U.S. Federal Reserve will keep interest rates low for longer and remained upbeat on China's economic growth and metals demand outlook.

The dollar steadied, having sunk to a 2-1/2 year low after the Fed on Wednesday noted weakness in U.S. inflation more explicitly than before, tempering the rate hike outlook. A weak dollar makes dollar-priced metals cheaper for non-U.S. investors.

"The move today is more dollar driven ... (though) optimism over demand in China has been the key driver ever since we got those stronger GDP numbers a few weeks ago," said Warren Patterson, commodities strategist at ING.

He added, however: "Shorts have had to come in and cover so it's exaggerated the move higher. I think we do need to see some consolidation around these levels."

* COPPER: London Metal Exchange copper rose 0.6 percent to $6,365.50 a tonne by 1001 GMT. That followed a 1.7-percent advance in the previous session, when the metal topped out at its highest since May 2015 at $6,400 a tonne.

* CHINA DEMAND: Earnings for China's industrial firms surged 19.1 percent in June from a year earlier, accelerating from May in a sign economic momentum remains solid despite rising borrowing costs.

China accounts for nearly half of global copper consumption estimated at 23 million tonnes this year.

* CHINA SCRAP BAN: China may ban imports of some scrap metal, including copper, from the end of 2018. However, metals researcher Antaike said the ban would likely affect less than the 1 million tonnes of imports that market participants were speculating could be impacted.

* METALS OUTPUT: Global miner and trader Glencore said copper output for the first half fell 9 percent, nickel production dropped 10 percent while zinc output jumped 13 percent.

The firm cut its full-year production guidance for copper, lead and nickel following the first-half falls, and also lowered its target for zinc because it expects to complete the sale of two zinc mines this year.

* RUSAL: Russia's Rusal said it expects oversupply in China's aluminum market to narrow in the second half, leading to a "much tighter market" for 2018. It also expects another 2-3 million tonnes of operating capacity to be shut by year-end.

* LONDON TIN: LME tin traded up 0.7 percent, having struck its highest in two months at $20,560 a tonne. Prices have been buoyed by falling stocks in LME warehouses.

(Additional reporting by Melanie Burton; editing by Susan Thomas)