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METALS-Copper rises on China stimulus hope, but gains capped by trade woes

Mai Nguyen

(Adds quotes, details and updates prices)

SINGAPORE, June 12 (Reuters) - Copper prices rose on Wednesday on hopes that top consumer China would increase spending for metal-intensive infrastructure projects, but a festering trade war between Beijing and Washington curbed further gains.

China will allow local governments to use proceeds from special bonds as capital for investment projects to support the economy, while U.S. President Donald Trump said he was holding up a trade deal with China until Beijing agrees to his points.

U.S. President Donald Trump on Tuesday defended the use of tariffs as part of his trade strategy, while China vowed a tough response if the United States insists on escalating trade tensions amid ongoing negotiations.

"All of these trade talk uncertainties have put base metals or commodities space into hostage. If this overarching issue is not removed or diminished, there's no way for base metals to have any meaningful direction," said analyst Helen Lau at Argonaut Securities.

FUNDAMENTALS

* COPPER: Three-month copper on the London Metal Exchange was up 0.1% at $5,882.50 a tonne, as of 0400 GMT, while the most-traded copper contract on the Shanghai Futures Exchange was down 0.3% at 46,540 yuan ($6,730.10) a tonne.

* PRICES: London aluminum dipped 0.2%, nickel was almost unchanged, zinc edged up 0.1%, while lead declined 0.8% and tin rose 0.4%.

* CHINA: China's factory gate inflation slowed amid sluggish commodity demand and faltering manufacturing activity, slowing from the previous month and fueling worries growth in the world's second-largest economy is slipping.

* MINERAL IMPORTS: The United States will team up with Canada and Australia to help countries around the world develop their reserves of minerals such as lithium, copper and cobalt, as part of a multi-pronged strategy to reduce global reliance on China.

* RARE EARTH SURVEY: China launched a survey of rare earth resources in seven regions on Monday, the China Securities Journal reported on Tuesday, amid speculation Beijing may curb exports of the materials to the United States.

* CHILE: Chilean Mining Minister Baldo Prokurica said on Tuesday the government of the South American mining powerhouse would favor neither private nor state investment as it seeks to ratchet up output of its world-leading reserves of lithium.

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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 = 6.9152 Chinese yuan)

(Reporting by Mai Nguyen, Editing by Sherry Jacob-Phillips)