METALS-Positive trade vibes push copper towards fifth weekly gain

Peter Hobson

(Updates with official prices)

LONDON, Dec 20 (Reuters) - Copper prices touched a seven-month high on Friday and were set for a fifth consecutive weekly gain after a U.S.-China trade deal dispelled some concerns about the health of the global economy.

Benchmark copper on the London Metal Exchange (LME) traded down 0.5% at $6,185 a tonne in official rings after reaching $6,235.50, the highest since May 7. It was up almost 1% this week and more than 5% this month.

"Copper had a good run and is holding its own," said Commerzbank analyst Daniel Briesemann, adding that optimism after Washington and Beijing agreed a "phase one" trade deal had lifted base metals and would support prices for some time.

But he said a "phase two" deal would be harder to achieve and global economic growth would weaken further next year, dragging copper to around $5,500 by mid-2020.

TRADE: U.S. Treasury Secretary Steven Mnuchin said the United States and China would sign their phase one pact in early January.

The U.S. House of Representatives overwhelmingly approved a new North American deal that leaves $1.2 trillion in annual U.S.-Mexico-Canada trade flows largely intact.

MARKETS: World stocks touched record highs.

CHINA: China kept its lending benchmark rate unchanged, but markets expect further monetary easing in 2020 to arrest an economic slowdown in the world's biggest metals consumer.

COPPER STOCKS: On-warrant copper inventories in LME-registered warehouses fell to 110,350 tonnes, the lowest since March, after 8,325 tonnes of cancellations. <MCUSTX-TOTAL>

DEFICIT: The global refined copper market had a 81,000-tonne deficit in September and 393,000-tonne shortfall for the first 9 months of the year, the International Copper Study Group (ICSG) said.

The ICSG said in October the copper market would move to surplus next year.

POSITIONING: "Copper open interest (OI) has increased notably across each of the three main exchanges (LME/Comex/SHFE) and is in aggregate up by around 1.3 million tonnes over the past month - a pace not seen since the 2016 US presidential election," Citi analysts said in a note.

This pointed to an increase in speculative bets on higher prices, they said, adding that prices were likely to rise to around $6,500 by mid-2020.

PRICE OUTLOOK: Fitch Solutions said in a note copper would average $5,700 a tonne in 2020, down from $6,000 this year, as global economic weakness persisted.

CHINA PREMIUMS: Chinese Yangshan copper import premiums fell to $59 from $85 in September, suggesting weakening demand for overseas metal. <SMM-CUYP-CN>

OTHER METALS: LME aluminum did not trade but was bid up 0.2% at $1,801 a tonne, zinc traded 0.7% higher at $2,340, nickel traded up 0.7% at $14,270 and lead was bid up 0.4% at $1,926. Tin traded 0.9% lower at $17,225.

All were heading for weekly gains.

(Additional reporting by Tom Daly; Editing by Edmund Blair)