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METALS-Copper steady as trade war worries offset soft dollar

Zandi Shabalala

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl (Adds official prices)

LONDON, July 11 (Reuters) - Copper was supported by a weaker U.S. dollar on Thursday after Federal Reserve Chairman Jerome Powell raised expectations for easing monetary policy although trade war tensions erased gains.

Powell said on Wednesday the U.S. economy was under threat from a damaging trade war between Washington and Beijing, disappointing factory activity and tame inflation.

Benchmark copper on the London Metal Exchange (LME) was flat in midday trading at $5,935 per tonne in official rings, after jumping 2% jump in the previous session.

"Stock markets are making new highs, bond yields are tracking lower and the dollar, most importantly, looks weaker again and that has helped copper recover to the current levels," said Ole Hansen, Saxo Bank's head of commodity strategy.

He said copper, which is used in power and construction, had settled into a range of between $5,800 and 6,100 per tonne, as the dollar's retreat made greenback-priced metals cheaper for holders of other currencies.

But gains were capped as investors eyed forecasts for slower growth in China, with vehicle sales potentially falling in 2019. A Reuters poll showed economists expect economic growth to weaken to a near 30-year low of 6.2% this year.

NICKEL STOCKS: Headline LME inventories of nickel <MNISTX-TOTAL> hit their lowest since Feb. 2013 at 153,612 tonnes. But the LME cash nickel contract stood at a $62 per tonne discount to the three-month, indicating ample supply.

LEAD: The difference between LME cash and three-month lead contracts <CMPB0-3> flipped to a premium of $10.50 a tonne on Wednesday after holding in the discount zone for nearly a month, indicating an nearby supply shortage.

STOCKS: On-warrant stocks of lead <MPBSTX-TOTAL> climbed 14,375 tonnes or 39% to 51,025 tonnes after falling to their lowest since 2008 on Tuesday.

"Lead smelters are all losing money, so prices should rise. Lead consumption now is not very good, but it will be better. The third and fourth quarters are the peak season for lead-acid battery consumption" a China-based lead sales manager said.

Benchmark lead fell 0.5% to $1,953 per tonne in official trading rings, snapping a three-session winning streak after touching its highest since April.

TIN: The tin market is under greater pressure from an economic slowdown and falling demand than supply issues, where lower production from countries such as Myanmar is likely to be offset by a new project in central Africa.

Three-month tin on the LME fell 1.9% to $17,855 per tonne.

PRICES: Aluminium was bid down 1.2% to $1,827 a tonne, zinc eased 0.2% to $2,395.50 and nickel touched its highest since mid-April, bid up 1% at $13,125.

(Reporting by Zandi Shabalala; Editing by Kirsten Donovan and Edmund Blair)