(Updates throughout, moves dateline from SINGAPORE)
LONDON, April 3 (Reuters) - Prices of copper and other industrial metals rose on Wednesday after strong Chinese manufacturing data and reports of progress in U.S.-China trade talks bolstered the outlook for demand.
Copper was also helped when indigenous leaders in Peru rejected negotiations with the government to end a disruption at a major Peruvian mine.
Benchmark copper on the London Metal Exchange (LME) was up 0.9 percent at $6,482.50 a tonne at 1037 GMT, heading towards last month's eight-month high of $6,555.50.
Strong Chinese purchasing managers' index (PMI) data and positive signals from trade talks were supporting metals prices, BMO analyst Kash Kamal said. "Pessimism is dissipating," he said.
CHINA ECONOMY: The Chinese Caixin/Markit composite manufacturing and services PMI rose to a nine-month high in March, adding to signs that stimulus is gradually kicking in.
China is the world's largest consumer of metals.
TRADE TALKS: The United States and China "expect to make more headway" in trade talks this week, White House economic adviser Larry Kudlow said.
"I can't report any of the details, but it's a larger, grander discussion than anything we've had before in U.S.-China trade relations, and there's a certain amount of optimism," Kudlow said.
The dispute pushed metals prices sharply lower last year.
GLOBAL MARKETS/DOLLAR: World stocks rallied to six-month highs, while the dollar weakened, helping metals by making them cheaper for buyers with other currencies.
LAS BAMBAS: An indigenous community that has blocked roads to Peru's Las Bambas copper mine decided not to negotiate with the government further until the group's lawyers are freed from jail.
The blockade has halted exports from Las Bambas, which produces about 400,000 tonnes of copper a year, accounting for about 2 percent of global production.
COPPER SPREAD: Cash copper on the LME has flipped from a $70 premium to the three-month contract last month to a $10.25 discount, suggesting a supply shortage has eased. <CMCU0-3>
OUTLOOK: "The overall picture is of a (copper) market in significant surplus and therefore lacking fundamental support in the first quarter of this year," Barclays analysts said in a note, pointing to a build-up in copper inventories in China that has offset a decline in LME warehouses. <CU-STX-SGH> <MCUSTX-TOTAL>
They said, however, that demand would likely improve, forecasting an average copper price of $6,230 this year and $6,350 in 2020.
NORSK HYDRO: Norsk Hydro said it could take months to return its Karmoey aluminum plant in western Norway to full capacity after a power outage that cut production by about 10 percent.
OTHER METALS: LME aluminum was up 0.2 percent at $1,893 a tonne, zinc was 1.6 percent higher at $2,903.50, nickel gained 1.3 percent to $13,310, lead rose 1.1 percent to $2,008 and tin was down 0.2 percent at $21,175.
(Reporting by Peter Hobson Additional reporting by Mai Nguyen; Editing by Dale Hudson)