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METALS-Copper prices drift lower on softer China data

Zandi Shabalala

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline from BEIJING)

LONDON, Sept 10 (Reuters) - Copper eased on Tuesday as downbeat factory data from top producer China highlighted the impact of Beijing's trade conflict with the United States and reinforced concerns over demand for the metal.

Benchmark copper on the London Metal Exchange (LME) shed 0.8% to $5,769 a tonne by 1016 GMT. The metal used in power and construction touched a more than two-year low of $5,518 on Sept. 3.

"Copper is still drifting on the weak economic indicators in China and other parts of the world ... still pointing to a contraction zone thats not helpful to copper prices," said ING analyst Wenyu Yao.

"Looks like the macro is winning at the moment."

Factory-gate prices in China shrank at the sharpest pace in three years in August, falling deeper into deflationary territory and reinforcing the urgency for Beijing to step up economic stimulus as the trade war intensifies.

Customs data on Sunday showed China's unwrought copper imports fell in August after a bounce the previous month.

STIMULUS: In the latest attempt to shore up China's slowing economy, the central bank last week said it was cutting the amount of cash banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126 billion) in liquidity.

NICKEL: Production of nickel ore in the Philippines rose 3% in the first half of 2019 to 11.31 million tonnes, its Mines and Geosciences Bureau said, despite zero production at more than half the country's mines.

Philippines producer Marcventures Holdings said it plans to develop and a new mine slated to begin commercial operation by 2021, seeking to take advantage of Indonesia's nickel export ban, which has been brought forward by two years.

PRICES: LME nickel eased 0.6% to $17,935 a tonne, still trading near five-year highs touched last week on lingering concern over potential shortages.

JAKARTA CONFERENCE: Traders in nickel, which is used to make stainless steel and electric vehicle batteries, have started arriving in Indonesia for the Asian Nickel conference.

POSITIONING: The net speculative long position on LME nickel reached a two-year high at 43% of open interest, or 75,000 lots, on Sept. 5, brokerage Marex Spectron estimates.

OTHER METALS: Aluminium was little changed at $1,799.50 a tonne, zinc shed 0.7% to $2,293, lead was steady at $2,096 and tin was flat at $17,300.

(Additional reporting by Tom Daly in BEIJING Editing by David Goodman)