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METALS-Copper rises on trade hopes; aluminum seen pressured by strong China output

Mai Nguyen

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SINGAPORE, May 15 (Reuters) - Copper and most other base metals rose on Wednesday, as investors took a breather from a recent escalation between the United States and China, following comments from U.S. President Donald Trump that trade talks with Beijing had not collapsed.

Trump on Tuesday called the trade war with China "a little squabble" and softened his tone in a series of remarks expressing optimism about reaching a trade deal with Beijing, which could help boost demand for metals.

A Beijing senior diplomat also confirmed that the two countries would "pursue relevant discussions," but stressed that how they pursue discussions "hinges upon further consultations between the two sides."

Three-month copper on the London Metal Exchange rose 0.6% to $6,065 a tonne by 0414 GMT, while nickel advanced 0.2% and zinc climbed 0.9%. However, aluminum edged down 0.03% and tin slipped 0.4%.

But some remained cautious over the outlook for metals.

"We suspect copper and the rest of the base metals sector will struggle while the trade conflict remains unresolved, even though fundamentals remain positive," ANZ said in a note.

China on Wednesday reported surprisingly weaker growth in industrial output, fixed-asset investment and retail sales for April, reinforcing expectations of further stimulus measure, while property investment remained the rare bright spot.

China's aluminum output for April rose 3.9% from the same time last year to 2.92 million tonnes, as higher aluminum prices encouraged smelters to ramp up production in the world's top producer of the metal.

The 2.92-million-tonne output for April translates to an average 97,300 tonnes of aluminum produced a day, the third highest daily rate for any month on record.

"Over production will be the trend going forward and will have the negative impact on aluminum prices. The economy is slowing down, demand is not strong," said analyst Helen Lau of Argonaut Securities.

FUNDAMENTALS

* COPPER: Copper headline stocks in London Metal Exchange-approved warehouses on Monday fell 2.5% from the previous session to 198,650 tonnes, latest data showed, while the global copper market is seen in deficit throughout 2019 and 2020. <MCUSTX-TOTAL>

* SHANGHAI PRICES: All base metals on the Shanghai Futures Exchange rose, following a strong rally session overnight in London. Shanghai copper rose 0.5% percent to 47,740 yuan ($6,946.42) a tonne, and aluminum advanced 1.1%.

* EV OUTLOOK: Global miner BHP will hold on to the Australian nickel operations, while Rio Tinto, is working on copper and lithium projects as the mining industry bets on demand for electric vehicle batteries.

* U.S. EV: U.S. lawmakers on Tuesday moved closer to developing a national electric vehicle supply chain policy, with senators voicing bipartisan support for legislation designed to parry China's dominance in metals and battery production.

* For the top stories in metals and other news, click or

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminum

Most active ShFE aluminum

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 6.8726 Chinese yuan renminbi)

(Reporting by Mai Nguyen; Editing by Rashmi Aich)