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METALS-London copper rebounds from 2-year low, nickel rally eases

Mai Nguyen

(Adds quotes, details, and updates prices) SINGAPORE, Sept 4 (Reuters) - London copper prices rebounded from a two-year low on Wednesday as investors engaged in arbitrage trade, while a surge in nickel prices eased. With London prices dropping, investors found it profitable to buy the London copper contract and simultaneously sell the Shanghai copper contract, or what is usually referred to as an open arbitrage window, traders and analysts said. Benchmark copper on the London Metal Exchange (LME) was up 1.5% at $5,692 a tonne, as of 0746 GMT, after falling to its lowest since May 2017 in the previous session as weak U.S. economic data stoked global recession fears. Meanwhile, the most-traded copper contract on the Shanghai

Futures Exchange fell as much as 1.5% to a nearly

two-month low at 45,730 yuan ($6,447.38) a tonne, before recovering later in the session and ended up 0.4%. "More people (in China) import to take the profit. But the arbitrage is not open a lot," said a physical metal trader. Nickel prices rose on both exchanges after falling in early Asian trading hours, as a rally fueled by supply shortage worries lost steam. "High inventories and alternative sources should see this supply-squeeze subside, limiting the upside in prices from here," said ANZ in a note, citing stockpiling within China and potential additional output from major miners such as Philippines.

London nickel rose 0.4% on Wednesday, having jumped

as much as 15% since Indonesia announced a ban to export ore

from 2020 on Friday. Shanghai nickel advanced 1.3%,

having surged as much as 18% in the same period.

FUNDAMENTALS

* COPPER PREMIUM: Yangshan copper premiums <SMM-CUYP-CN>, paid on top of LME copper prices to import metal into China, were at $77 a tonne, their highest since November 2018.

* COPPER STOCKS: LME copper canceled warrants, which often indicates physical demand, surged to their highest since September 2018 at 117,900 tonnes. <MCUSTX-TOTAL>

* NICKEL SPREAD: The premiums of LME cash nickel to the three-month contract <MNI0-3> eased to $38 a tonne, indicating nearby supply was not as tight as last week when the premium surged to a decade-high of $104.

* INDONESIA: Indonesia's ban on nickel ore exports could boost the country's earnings from the metal five-fold in the next five years through growth in industries such as stainless steel and battery materials, a minister said.

* NICKEL STOCKS: LME's on-warrant nickel stocks <MNISTX-TOTAL>, or those available for delivery, dropped to 83,352 tonnes, their lowest since 2011.

* TRADE WAR: U.S. President Donald Trump on Tuesday warned he would be "tougher" on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing U.S.-China trade disputes could trigger a U.S. recession.

PRICES: London aluminum rose 0.4%, zincrallied 2.1% and tin climbed 1.9%. Shanghai tinended 3.1% firmer, while zinc rose 0.4%.* 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 = 7.0928 Chinese yuan)

(Reporting by Mai Nguyen; editing by Sriraj Kalluvila and Sherry Jacob-Phillips)