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METALS-Shanghai zinc prices fall sharply after LME inventory surge

(Adds broker comment, updates prices) BEIJING, March 6 (Reuters) - Shanghai zinc prices fell to their lowest since December on Tuesday, tracking a decline on the London Metal Exchange (LME) after LME warehouse inventories rose and on-warrant zinc stocks - those not earmarked for delivery - nearly doubled. The metal, used to galvanise steel, is also coming under pressure after President Donald Trump said the United States would impose tariffs of 25 percent on steel imports. A number of countries, including China and Canada, have criticised the move, sparking talk of a trade war. Trump also vowed to impose a 10 percent duty on aluminium imports. "Trade war fears continue to overhang the markets ... causing headwinds for LME metals," broker Sucden Financial said in a note on Tuesday.

FUNDAMENTALS

* SHFE ZINC: The most traded April zinc contract on the Shanghai Futures Exchange was down 2.2 percent at 25,410 yuan ($4,007.51) a tonne by the mid-session interval, on course for its biggest daily drop since Dec. 6. It earlier touched 25,210 yuan a tonne, its lowest since Dec. 15.

* LME ZINC: Zinc in London was up 0.2 percent at $3,304 a tonne at 0400 GMT, after hitting a 2018-low in the previous session. Stocks of zinc in LME warehouses <MZN-STOCKS> jumped by 59 percent on Monday to 209,050 tonnes, while on-warrant levels nearly doubled to 162,825 tonnes.

* LME COPPER: Three-month copper on the London Metal Exchange was up 0.3 percent at $6,933.50 on a weaker dollar, extending a 0.2 percent gain from the previous session. A weaker greenback makes metals cheaper for holders of other currencies and can support prices

* SHFE METALS: The most-traded April copper contract on the Shanghai Futures Exchange edged up 0.2 percent to 52,210 yuan a tonne, while lead shed 1.4 percent.

* TRUMP: Trump faced growing pressure on Monday from political and diplomatic allies as well as U.S. companies urging him to pull back from proposed steel and aluminium tariffs, although he said he would stick to his guns.

* INDONESIA: Indonesia's President Joko Widodo has instructed his administration to complete negotiations over the purchase of a majority stake in Freeport-McMoRan Inc's local unit by the end of April, a cabinet minister said on Monday.

* COBALT: Australia's Celsius Resources, which has made Namibia's first cobalt discovery, is aiming to start production from the remote mine in 2020, the company's managing director said.

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MARKETS NEWS

* Asian share regained some ground on Tuesday.

PRICES

BASE METALS PRICES 0346 GMT Three month LME copper 6934 Most active ShFE copper 52210 Three month LME aluminium 2142.5 Most active ShFE aluminium 14340 Three month LME zinc 3304 Most active ShFE zinc 25405 Three month LME lead 2416 Most active ShFE lead 18550 Three month LME nickel 13420 Most active ShFE nickel 102000 Three month LME tin 21545 Most active ShFE tin 146860

BASE METALS ARBITRAGE

LME/SHFE COPPER LMESHFCUc3 1153.61 LME/SHFE ALUMINIUM LMESHFALc3 -1430.7 LME/SHFE ZINC LMESHFZNc3 561.66 LME/SHFE LEAD LMESHFPBc3 30.93 LME/SHFE NICKEL LMESHFNIc3 1590.86

($1 = 6.3406 Chinese yuan renminbi)

(Reporting by Tom Daly; editing by Richard Pullin and Joseph Radford)