(Recasts, updates prices, changes dateline, adds quote/details) By Naveen Thukral LONDON, Feb 12 (Reuters) - Zinc fell for a third session on Tuesday, hitting its lowest in more than two weeks, as the dollar held near a two-month high and investors remained concerned about global economic growth. In wider markets, global equities rallied as investors grew more optimistic about U.S.-China trade talks and cheered Washington's deal to avoid another government shutdown, but this was not enough to lift metals. "The rational for higher (metals) prices right now is not stacking up," said Bank of America-Merrill Lynch analyst Michael Widmer. "There (has been) higher confidence that maybe if we get a trade deal we'll get higher prices, if China data improves we'll get higher prices. But realistically, for now, the U.S. is slowing, Europe is going nowhere and China is finding it hard to stimulate its economy." He added, however, that zinc should find support at about $2,400 to $2,500 a tonne because of tight stocks. Benchmark zinc on the London Metal Exchange shot up by nearly a fifth in the month to Feb. 5, when it touched a seven-month peak of $2,810 a tonne, but has since slipped. It traded down 0.4 percent in official midday rings at $2,634.50 a tonne on Tuesday, having hit a low of $2,626.50. * ZINC STOCKS: Underpinning zinc, data showed LME inventories of the metaleroded further to their lowest since January 2008. * ZINC TECHNICALS: Zinc attracted additional selling on Monday after it breached the 200-day moving average at $2,662.51. * SPREADS: Cash zinc traded at a premium of $1 a tonne to the three-month price, off a high of $125 in early December, though Citi said the reduced tightness in the spreads was lulling the market into "a false sense of looseness". * DEMAND: "The seasonal demand pick up in the second quarter has the potential to almost wipe out (zinc) exchange stocks. Our short-term point price target remains $2,800, but by the end of the year we expect zinc to trade down to $2,400," the bank said. * TRADE TALKS: U.S. Trade Representative Robert Lighthizer arrived in the Chinese capital on Tuesday ahead of high-level trade talks scheduled this week for the world's two largest economies to hammer out a deal ahead of a March 1 deadline. * THYSSENKRUPP: German steel-to-elevators group Thyssenkrupp on Tuesday warned of a darkening economic backdrop, including a weakening automotive market, signalling tough times for its capital goods business ahead of a planned separation. * OTHER METALS: Copper traded down 0.5 percent in rings at $6,118, aluminium traded down 0.7 percent at $1,866, lead traded up 0.1 percent at $2,048, nickel was last bid down 0.2 percent at $12,470 while tin was last bid down 0.4 percent at $20,950. (Additional reporting by Naveen Thukral Editing by David Goodman and Kirsten Donovan)
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.