METALS-Copper hits 10-week high on expectations for recovery
* Copper up 7 percent so far this month
* Zinc hits five-month high on increased China imports
* U.S. consumer sentiment weakens in August
By Susan Thomas and Harpreet Bhal
LONDON, Aug 16 (Reuters) - Copper hit a 10-week high on Friday, heading for a third week of gains, on expectations that a global economic recovery would increase demand for industrial metals.
Copper has risen more than 7 percent so far this month, rebounding from three-year lows hit in June, on signs of resilience in China's economy, an exit from recession for Europe and a U.S. recovery slowly gaining steam.
China's July production of refined copper fell nearly 6 percent from June to a five-month low, data showed. This could mean the world's top consumer and producer of the metal will need to import more, supporting prices.
Three-month copper on the London Metal Exchange hit the highest level since June 6 at $7,420 a tonne in intraday trade. It ended at $7,400 a tonne, up from a close of $7,310 on Thursday.
Improvement in Europe and elsewhere undercut the perceived relative strength of the U.S. economy, putting some pressure on the dollar. This helped underpin base metals prices, because a weaker dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.
The dollar fell against the euro after data showed U.S. consumers were slightly less optimistic in August as sentiment retreated from last month's six-year high, but it later rebounded off lows.
"I think the main support for base metals in the last two trading sessions was a weaker U.S. dollar," Myrto Sokou, senior research analyst at Sucden, said.
"Support has also come from recent U.S. economic data, including employment data, confirming the recovery in the U.S. market. Overall, there are quite solid economic prospects which signal higher demand in the medium term."
The number of Americans filing new claims for jobless benefits fell to a near six-year low last week, and consumer prices rose broadly in July.
This, however, may draw the U.S. Federal Reserve closer to trimming its bond-buying programme, which could weigh on demand for metals.
In other metals, zinc prices rallied to five-month highs of $2,009 a tonne, the highest since March 13, as imports to China pick up this year and after a close above the 200-day moving average prompted chart-based buying, traders said.
"We have been friendly to the metals markets for some time now, but several complexes are nearing the top band of their widening trading ranges and could encounter more serious setbacks if those levels were approached," Ed Meir, analyst at INTL FCStone, said in a note.
"Specifically, we are now within sight of $7,550 resistance on copper, $1,975 on aluminum and $2,260 on lead, all three being potential flash points."
Benchmark zinc ended at $2,008 a tonne, from $1,960 at the close on Thursday. Lead ended at $2,249.50 from $2,205, while aluminium closed at $1,945 from $1,907.
Tin ended at $21,925 from $21,590 at the close on Thursday. while nickel, untraded at the close, was bid at $14,995 from $14,725.
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