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* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl
* Nickel hits three-week lows (Recasts, adds comment, changes dateline from Singapore)
LONDON, June 5 (Reuters) - Prices of industrial metals rose on Wednesday as sentiment improved after dovish comments from the U.S. Federal Reserve chairman, but concern about the damage to growth from the U.S.-China trade dispute capped gains.
Benchmark copper on the London Metal Exchange was little changed at $5,876 a tonne at 1043 GMT.
Worries about demand in China, which accounts for around half of global consumption of industrial metals, pushed copper prices to a five-month low of $5,801 a tonne on Monday.
"The Fed has gone into damage limitation mode and the market is taking it at face value," a metals trader said. "They could say next week when they may cut rates."
The U.S. central bank meets June 18-19.
RATES: The Fed will respond "as appropriate" to the risks posed by a global trade war and other recent developments, its chairman Jerome Powell said on Tuesday in remarks that seemed to open the door to the possibility of a rate cut.
"The Fed can blunt the impact of a slowdown from trade taxes. It probably cannot stop a slowdown from trade taxes," UBS analysts said in a note.
"Global growth is likely to be below trend this year - it was likely to be trend, absent trade taxes. However, Fed action would be able to reduce the risk of recession."
DOLLAR: Rising expectations of a U.S. rate cut hit the dollar, which fell to a seven-week low against a basket of currencies.
A weaker U.S. currency makes dollar-denominated commodities cheaper for holder of other currencies, which could potentially boost demand. This is a relationship used by funds to generate buy and sell signals from numerical models.
CHINA: Metals markets are looking ahead to industrial production and investment data from China for clues to demand prospects over coming months.
G20: Also on the radar is a meeting of the Group of 20 nations in Japan over the weekend, where trade tensions will be a major topic of discussion.
NICKEL: Nickel prices bucked the trend, falling to 3-week lows of $11,780 on worries about weaker demand from the stainless steel sector, which accounts for two-thirds of global demand estimated at around 2.4 million tonnes.
It was last down 0.2% at $11,800 a tonne.
Also weighing on nickel are increases in stocks in LME-approved warehouses, which have been on a downtrend since late 2017. Latest data shows stocks are up 5,136 tonnes at 164,052.
PRICES: Aluminium was up 0.7% at $1,798 a tonne, zinc gained 0.1% to $2,478, lead added 1.6% to $1,875 and tin rose 0.1% to $19,105.
(Reporting by Pratima Desai; Editing by Jan Harvey)