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METALS-Copper rebounds on optimism over U.S.-China trade talks

Peter Hobson

(Updates with official prices)

LONDON, Sept 5 (Reuters) - Copper prices rose on Thursday to the highest since Aug. 19 after China and the United States agreed to hold high level trade talks, reviving hopes for an end to a dispute that has weakened global economic growth and consumption of metals.

Benchmark copper on the London Metal Exchange (LME) traded up 0.9% at $5,800 a tonne in official rings, rising from a two-year low of $5,518 on Tuesday.

"Trade talks are good news as far as base metals are concerned," said Capital Economics analyst Ross Strachan. "(But) it's not a huge boost because there's still a lot of scepticism that a deal will be reached."

He forecast copper at $5,800 at the end of the year and said supply deficits were likely to push prices higher after that.

TRADE WAR: "Lead negotiators from both sides had a really good phone call this morning," China's commerce ministry said. "We'll strive to achieve substantial progress during the 13th Sino-U.S. high-level negotiations in early October."

MARKETS/YUAN: Global stock markets rallied. The yuan strengthened against the dollar, helping metals by making them cheaper in China, the world's biggest metals consumer.

But Chinese authorities are likely to allow the yuan to weaken further as the country's economy slows, a Reuters poll of strategists showed.

CHINA EXPORTS: China's exports likely rose slightly in August but imports contracted for a fourth straight month, a Reuters poll showed, pointing to further strains on the economy.

CHINA STIMULUS: China indicatied it will reduce the reserve requirement ratio for banks to boost lending.

GERMAN FACTORIES: German industrial orders fell more than expected in July, data showed, suggesting the country could tip into a recession in the third quarter.

ZINC: Cash zinc on the LME has flipped to a $14.50 premium against the three-month contract, pointing to tighter nearby supply. <MZN0-3>

Benchmark zinc traded up 1.4% at $2,342 a tonne from a three-year low of $2,190 reached on Tuesday.

NICKEL: The premium for cash nickel over three month metal <MNI0-3> fell to $19, continuing a rapid fall from 10-year highs.

The benchmark contract was down 2.6% at $17,505 a tonne after news of an ore export ban by top producer Indonesia this week rocketed prices to a five-year high of $18,850.

TIN: LME tin traded 0.3% higher at $17,250 a tonne after producers including the world's top two - China's Yunnan Tin and Indonesia's PT Timah - said they would reduce production by around 30,000 tonnes this year -- around 8% of total supply.

OTHER METALS: LME aluminium traded up 0.1% at $1,777.50 a tonne and lead traded 0.7% higher at $2,065.

(Reporting by Peter Hobson; additional reporting by Mai Nguyen; editing by Elaine Hardcastle and Emelia Sithole-Matarise)