METALS-Demand worries drive copper prices towards 5-month lows

Pratima Desai

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl

* LME copper stocks jump, ShFE stocks down (Recasts, adds comment, changes dateline from Singapore)

LONDON, June 13 (Reuters) - Copper prices slipped towards the five-month lows seen earlier this month on Thursday as nervousness about demand in top consumers China and the United States, weak Chinese data and higher inventories hit sentiment.

Benchmark copper on the London Metal Exchange was down 0.4% at $5,827 a tonne at 1100 GMT.

Earlier in June, prices of the metal used widely by investors as a gauge of global economic health touched $5,740 a tonne, the lowest since Jan. 3.

"As long as they only talked about trade tariffs I wasn't overly concerned about demand as it just makes things more expensive," said Julius Baer analyst Carsten Menke.

"But bans and boycotts like those on Huawei disrupt supply chains which will have a negative impact on demand."

DEMAND: China accounts for around half of global copper demand, estimated at 24 million tonnes this year, while the United States consumes nearly 10%.

HUAWEI: Latest developments include a ban on federal contracts with firms that do business with the Chinese telecom giant, part of a defense law passed last year.

TRADE: China and the United States agreed to halt additional tariffs to keep their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days.

ECONOMY: Data from China showed the world's largest vehicle market had its biggest-ever monthly automobile sales drop in May and factory inflation slowed during the same period as faltering manufacturing hit demand.

INVENTORIES: Stocks of copper at 248,550 tonnes have climbed 35 percent since the end of May <MCUSTX-TOTAL>.

Traders say the market would need to see a similar uptrend in warehouses monitored by the Shanghai Futures Exchange to believe demand was weakening.

"Funds trade on headline numbers," a copper trader said.

"Shanghai stocks have been trending down, just as they usually do at this time of year, demand is normally stronger in the second quarter. It's seasonal."

Latest data showed copper stocks in ShFE warehouses at 145,626 tonnes, down more than 40% since March 31. ShFE stocks will be updated on Friday <CU-STX-SGH>.

FED RATES: Expectations of an interest rate cut by the U.S. Federal Reserve helped cushion prices. The U.S. central bank meets next Tuesday and Wednesday.

A rate cut could weaken the U.S. currency and make dollar-denominated metals cheaper for importers using other currencies.

CHILE: Unionised workers at Codelco's Chuquicamata copper mine, one of the world`s largest, said late on Wednesday they would strike after failing to reach a labor deal with the world's top copper producer.

PRICES: Aluminium was down 0.3% at $1,784, zinc lost 0.8% to $2,490, lead gained 0.2% to $1,902, tin rose 0.3% to $19,350 and nickel added 1% to $11,955.

(Reporting by Pratima Desai; editing by Kirsten Donovan)