(Updates prices) MANILA, May 17 (Reuters) - London copper futures pared gains on Thursday as the U.S. dollar hovered near a five-month high against the euro and amid worries over slower demand in top copper user China. Three-month copper on the London Metal Exchange was up 0.3 percent at $6,844.50 a tonne by 0714 GMT, off a session-high of $6,866. ANZ analysts said in a note that the copper market appeared to be tightening, with the front-end of the curve moving into backwardation, when prices for future delivery are lower than those for immediate dispatch. The one-day spread on tomorrow's contracts, or tom-next spread, stood at $50 per tonne. "This appears to be creating a short squeeze, with many traders forced to buy back short positions," ANZ said. "If you look at the longer term, there's definitely a bull case for copper," Argonaut Securities analyst Helen Lau said, citing declining ore grades and rising cost, among other factors. "But in the short-term, we still need to grapple with slowing copper demand from China especially in the power sector."
DOLLAR: The euro stayed near a five-month low against the greenback on concerns political developments in Italy could cause wider disruptions in the euro bloc, making dollar-denominated assets more costly for holders of other currencies. SHANGHAI COPPER: The most-traded July copper contract on the Shanghai Futures Exchange closed up 0.2 percent at 51,050 yuan ($8,023) a tonne. BULL CYCLE: Metals markets are moving into a new bull cycle that will be longer and shallower than the last, driven by rising inflation and dispersed demand growth, panelists said at the LME week Asia conference in Hong Kong. CHALCO: Aluminum Corp of China Ltd, or Chalco, plans to export 30,000-50,000 tonnes of alumina in May, the company's president said. U.S.-CHINA: The United States and China launch trade talks on Thursday in a bid to avert a damaging tariff war, with the White House's harshest China critic relegated to a supporting role, senior Trump administration officials said. HONG KONG EXCHANGE: The head of Hong Kong Exchanges and Clearing said it would take time for the group to develop its metals business on the Chinese mainland, including plans to develop its commodity business in Qianhai in southern China and start warehousing through its London Metal Exchange operations. LITHIUM: Australia's Kidman Resources said it would supply lithium for Tesla Inc's electric car batteries, the latest in a string of deals by carmakers securing supplies of the mineral as demand surges for clean cars. OTHER METALS: LME aluminum rose 0.4 percent to $2,325 a tonne and nickel was flat at $14,475. In Shanghai, aluminum climbed 1 percent to end at 14,885 yuan per tonne, while nickel added 0.4 percent to 107,820 yuan.
BASE METALS PRICES 0714 GMT Three month LME copper 6844.5 Most active ShFE copper 51050 Three month LME aluminum 2325 Most active ShFE aluminum 14885 Three month LME zinc 3063.5 Most active ShFE zinc 23570 Three month LME lead 2333.5 Most active ShFE lead 19410 Three month LME nickel 14475 Most active ShFE nickel 107820 Three month LME tin 20800 Most active ShFE tin 145900
BASE METALS ARBITRAGE
LME/SHFE COPPER LMESHFCUc3 301.53 LME/SHFE ALUMINIUM LMESHFALc3 -2329.51 LME/SHFE ZINC LMESHFZNc3 436.06 LME/SHFE LEAD LMESHFPBc3 569.28 LME/SHFE NICKEL LMESHFNIc3 -1377.41
($1 = 6.3627 Chinese yuan)
(Reporting by Manolo Serapio Jr. Editing by Joseph Radford)