METALS-Copper touches highest in a week on easing trade and Middle East tensions

Pratima Desai


* Premium for cash over 3-month zinc at highest since Dec

* 3-month zinc trades near two-month high

* LME zinc stocks near 30-year lows

(Updates with closing prices, Congo output) LONDON, Jan 9 (Reuters) - Copper prices scaled one-week highs on Thursday, supported by easing tensions in the Middle East, China confirming it would sign a preliminary trade deal with the United States next week and expectations of stronger Chinese demand.

Benchmark copper on the London Metal Exchange

touched a session high of $6,213.50, its highest since Jan. 2, before closing at a steady $6,180 a tonne. U.S. President Donald Trump stepped back from new military action against Iran after its retaliatory missile strikes on Iraqi bases housing U.S. troops caused no casualties.

"As we move into peak demand season from late in the first quarter and into the second quarter, we will see clear trends on the deficit in the copper market," said Deutsche Bank analyst Nicholas Snowdown. "Inventories are still extremely low."

TRADE: China's Vice Premier Liu He, head of the country's negotiation team in Sino-U.S. trade talks, will sign a "Phase 1" deal in Washington next week. Liu will visit Washington on Jan. 13-15. "Copper has been a proxy trade for current macro issues," said Bank of America Merrill Lynch analysts in a note. "A rapprochement between the U.S. and China could push the red metal higher ... The ongoing lack of mine supply growth should increasingly support" prices. INVENTORIES: Copper stocks in London Metal Exchange <MCUSTX-TOTAL> registered warehouses at 135,800 tonnes are at their lowest since March last year and down nearly 60% since late August. In warehouses monitored by the Shanghai Futures Exchange, copper inventories at around 141,000 tonnes are down nearly 50% since March 2019 <CU-STX-SGH>. TECHNICALS: Upside resistance is at $6,270, near the 8-month high hit in late December, and support kicks in at the 21-day moving average, currently at $6,170. CHINA: China's consumer inflation steadied, while factory-gate prices fell at a slower pace in December, giving Beijing room to stay the course on monetary easing as economic growth cools. Faster credit expansion will be key to stabilising economic growth, which cooled to 6% in the third quarter of 2019, the slowest since the early 1990s. China accounts for half of global copper demand estimated at around 24 million tonnes this year. CONGO SUPPLY: Copper production in Democratic Republic of Congo rose 15.9% year-on-year to 1.308 million tonnes for the period from January to November 2019, according to central bank figures. ZINC: The premium for the cash over the three-month contract rose to $18 a tonne <MZN0-3>, the highest since early December. The rise has been fuelled by worries about LME stocks, which have fallen to 30-year lows around 50,000 tonnes <MZN-STOCKS>, and large holdings of LME warrants and cash contracts <0#LME-WHC>.

Three-month zinc closed 1.1% lower at $2,377 a

tonne, after earlier hitting a two-month high of $2,416.

PRICES: Aluminium added 0.2% to $1,803.50, leadgained 1.5% to $1,929, nickel added 0.2% to$14,085 and tin climbed 0.5% to $17,250.

(Reporting by Pratima Desai; Editing by Mark Potter and Kirsten Donovan)