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METALS-Shanghai zinc hit near 6-week high as LME stocks drop

SINGAPORE, Oct 29 (Reuters) - Shanghai zinc prices hit a nearly six-week high on Tuesday, while London zinc prices were hovering around a four-month peak as deteriorating inventories sparked supply shortage concerns.

The most-traded zinc contract on the Shanghai Futures Exchange (ShFE) climbed as much as 1.4% to 19,225 yuan ($2,721.51) a tonne, its highest since Sept. 18, but the contract later eased and was trading up 1% at 0148 GMT.

Three-month zinc on the London Metal Exchange (LME) dipped 0.2% to $2,539 a tonne, reversing a streak of three straight gains but still hovering around a four-month high level hit last week.

FUNDAMENTALS

* ZINC STOCKS: On-warrant LME zinc stocks <MZNSTX-TOTAL> dropped to a record low of 33,000 tonnes, while Shanghai zinc stocks <ZN-STX-SGH> fell to their lowest since June 6 at 64,075 tonnes, latest data showed.

* ZINC SPREAD: The premium of LME cash over three-month zinc contract <CMZN0-3> rose to $46.50 a tonne, its highest since September 30, indicating tight nearby supplies.

* ZINC BALANCE: Refined zinc is expected to be in a deficit of 178,000 tonnes in 2019, however it is likely to move into a surplus of 192,000 tonnes in 2020, the International Lead and Zinc Study Group said.

* NICKEL: LME nickel dipped 0.1% to $16,630 a tonne, and ShFE nickel was almost unchanged, while the difference between the cash and the three-month contract <MNI0-3> was at a premium of $26 a tonne.

* INDONESIA: Indonesian nickel miners agreed on Monday to stop nickel ore exports immediately, the country's investment agency chief Bahlil Lahadalia said.

* TRADE TALKS: U.S. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing.

* COPPER TC/RC: The copper treatment charge (TC) benchmark in 2020 is likely to fall at least 13% from this year to $60-70 a tonne due to tight ore supply, a Reuters survey showed, as the world's metal industry gathers in London for LME Week.

* METALS OUTLOOK: Prices of copper and other industrial metals are expected to be capped next year as weak economic growth weighs on the market, a Reuters poll showed.

* PRICES: LME copper eased 0.1%, aluminum was almost unchanged and lead fell 0.3%. ShFE copper dipped 0.1%, aluminum decreased 0.5%, while tin fell 0.3%.

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MARKETS NEWS

* Asian shares scaled a three-month high after Wall Street hit all-time peaks amid hopes of progress in Sino-U.S. trade talks and for another dose of policy stimulus from the Federal Reserve this week.

DATA AHEAD (GMT)

0700 UK Nationwide house prices Oct

0745 France Consumer Confidence Oct

0900* Italy Producer Prices YY Sept

0930 UK BOE Consumer Credit Sept

0930 UK Mortgage Lending Sept

0930 UK Mortgage Approvals Sept

1300 US CaseShiller 20 MM SA Aug

1400 US Consumer Confidence Oct

1400 US Pending Home Sales Change MM Sept

N/A US U.S. Federal Reserve's Federal Open Market

Committee starts its two-day meeting on

interest rates

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 = 7.0641 Chinese yuan renminbi) (Reporting by Mai Nguyen; Editing by Rashmi Aich)