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METALS-China demand worries drive copper to one-week low, but dollar supports

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Releads, adds closing prices)

LONDON, June 13 (Reuters) - Copper hit one-week lows on Wednesday as worries about demand in top consumer China undermined sentiment before a lower dollar and labour negotiations at the Escondida mine in Chile helped prices to recover after the U.S. open.

Benchmark copper on the London Metal Exchange ended 0.5 percent up at $7,256 a tonne, its highest since June 6, having earlier touched $7,169.

“Credit indicators out of China were quite weak, fabrication numbers for copper are poor,” said Dan Smith, head of commodities research at Oxford Economics. “But supply risks are still significant. We’re watching Escondida pretty closely.”

LOANS: Chinese banks extended 1.15 trillion yuan ($179.6 billion) in net new yuan loans in May, below analysts’ expectations of 1.2 trillion yuan but up slightly from April’s 1.18 trillion yuan.

FINANCING: China’s total social financing, a broad measure of credit and liquidity, dropped sharply to 760.8 billion yuan in May from 1.56 trillion yuan in April, central bank data showed on Tuesday.

DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. firms, which could potentially boost demand.

INTEREST RATES: The U.S. Federal Reserve is widely expected to raise rates on Wednesday and investors will scan its announcement for clues on how many more rises might be on the cards this year.

ESCONDIDA: Global miner BHP said it had responded to the latest contract proposal from unionised workers at its Escondida mine, the world’s largest, triggering a new round of talks that could last a month or more.

The union’s proposal, filed with the company in early June, included a salary increase of 5 percent and a one-off bonus of $34,000, equivalent to 4 percent of dividends distributed to shareholders.

PRICES: Aluminium ended 1.1 percent down at $2,275, zinc gained 0.5 percent to $3,216, lead rose 0.4 percent to $2,485, tin lost 1.2 percent to $20,875 and nickel was bid up 2.7 percent to $15,625.

Editing by Dale Hudson and David Goodman