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METALS-Copper slips despite Trump's hint of quick trade deal with China

Peter Hobson

(Updates with closing prices)

LONDON, Sept 26 (Reuters) - Copper prices fell on Thursday as investors focused on a weak demand outlook and were sceptical of a suggestion by U.S. President Donald Trump that he could soon reach a trade deal with China.

Industrial metals were also caught in wider market moves as accusations that Trump pressed Ukraine to investigate a political rival pushed down U.S. stocks and government debt yields.

Trading activity was low ahead of a week-long holiday in China, the biggest metals consumer, starting on Oct. 1.

Benchmark copper on the London Metal Exchange (LME) ended down 1.1% at $5,722 a tonne, near a two-year low of $5,518 at the start of the month.

Trade disputes and weakening economic growth have hit industrial metals prices despite deficits of some metals including copper.

"Many market players do not buy yesterday's argument (by Trump) that a trade deal may be imminent," said Commerzbank analyst Daniel Briesemann.

"They are waiting on the sidelines."

TRADE WAR: China's commerce ministry said preparations were ongoing to ensure "positive progress" after Trump on Wednesday said a deal to end a nearly 15-month trade war with China could happen sooner than people think.

CHINA MANUFACTURING: China's factory activity is expected to have contracted for a fifth straight month in September, a Reuters poll showed, adding to the country's economic woes.

COPPER STOCKS: On-warrant stocks of copper available to the market in LME-registered warehouses slid 20,725 tonnes to 163,200 tonnes, the lowest since April 25. <MCUSTX-TOTAL>

POSITIONING: Speculators held a short position in LME copper equal to 4% of open contacts as of Tuesday, down from 12% in June, brokers Marex Spectron said.

ZINC: Benchmark zinc closed up 0.4% at $2,299 a tonne as on-warrant LME stocks sat at record lows and the premium for cash metal over the three-month contract rose to $38.50, the highest since early July, pointing to tighter nearby supply. <MZNSTX-TOTAL> <MZN0-3>

Zinc hit a three-year low of $2,190 this month. A supply squeeze has not pushed prices up more because investors expect supply to pick up over the coming months while demand remains weak, said analysts at ING.

NICKEL: Nickel finished down 0.7% at $17,210 a tonne. On-warrant LME inventories this week hit the lowest since 2008 and the premium for cash over three-month metal at $130 is near a 10-year peak. <MNISTX-TOTAL> <MNI0-3>

ALUMINA: The Chinese city of Luliang imposed a temporary 50% production cut on alumina refineries, sending spot alumina prices in North China <SMM-ALM-NCHN> to a 2-1/2-month high.

OTHER METALS: Aluminium ended down 0.9% at $1,737 a tonne, lead fell 0.7% to $2,093 and tin gained 1.2% to $16,325.

(Reporting by Peter Hobson; Additional reporting by Tom Daly; Editing by Pravin Char and Lisa Shumaker)