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METALS-Copper cuts gains on firmer dollar, worries over Chinese demand

 (Updates prices)
    By Manolo Serapio Jr
    MANILA, May 17 (Reuters) - London copper futures pared gains
on Thursday as the U.S. dollar hovered near a five-month high
against the euro and amid worries over slower demand in top
copper user China.
    Three-month copper on the London Metal Exchange was
up 0.3 percent at $6,844.50 a tonne by 0714 GMT, off a
session-high of $6,866.
    ANZ analysts said in a note that the copper market appeared
to be tightening, with the front-end of the curve moving into
backwardation, when prices for future delivery are lower than
those for immediate dispatch.
    The one-day spread on tomorrow's contracts, or tom-next
spread, stood at $50 per tonne. "This appears to be creating a
short squeeze, with many traders forced to buy back short
positions," ANZ said.
    "If you look at the longer term, there's definitely a bull
case for copper," Argonaut Securities analyst Helen Lau said,
citing declining ore grades and rising cost, among other
    "But in the short-term, we still need to grapple with
slowing copper demand from China especially in the power
    DOLLAR: The euro stayed near a five-month low against the
greenback on concerns political developments in Italy could
cause wider disruptions in the euro bloc, making
dollar-denominated assets more costly for holders of other
    SHANGHAI COPPER: The most-traded July copper contract on the
Shanghai Futures Exchange closed up 0.2 percent at
51,050 yuan ($8,023) a tonne.
    BULL CYCLE: Metals markets are moving into a new bull cycle
that will be longer and shallower than the last, driven by
rising inflation and dispersed demand growth, panelists said at
the LME week Asia conference in Hong Kong.
    CHALCO: Aluminum Corp of China Ltd, or Chalco, plans to
export 30,000-50,000 tonnes of alumina in May, the company's
president said.
    U.S.-CHINA: The United States and China launch trade talks
on Thursday in a bid to avert a damaging tariff war, with the
White House's harshest China critic relegated to a supporting
role, senior Trump administration officials said.
    HONG KONG EXCHANGE: The head of Hong Kong Exchanges and
Clearing said it would take time for the group to
develop its metals business on the Chinese mainland, including
plans to develop its commodity business in Qianhai in southern
China and start warehousing through its London Metal Exchange
    LITHIUM: Australia's Kidman Resources said it would
supply lithium for Tesla Inc's electric car batteries,
the latest in a string of deals by carmakers securing supplies
of the mineral as demand surges for clean cars.
    OTHER METALS: LME aluminium rose 0.4 percent to
$2,325 a tonne and nickel was flat at $14,475. In
Shanghai, aluminium climbed 1 percent to end at 14,885
yuan per tonne, while nickel added 0.4 percent to 107,820 yuan.
 BASE METALS PRICES                                    0714 GMT
 Three month LME copper                                  6844.5
 Most active ShFE copper                                  51050
 Three month LME aluminium                                 2325
 Most active ShFE aluminium                               14885
 Three month LME zinc                                    3063.5
 Most active ShFE zinc                                    23570
 Three month LME lead                                    2333.5
 Most active ShFE lead                                    19410
 Three month LME nickel                                   14475
 Most active ShFE nickel                                 107820
 Three month LME tin                                      20800
 Most active ShFE tin                                    145900
 BASE METALS ARBITRAGE                                         
 LME/SHFE COPPER                LMESHFCUc3               301.53
 LME/SHFE ALUMINIUM             LMESHFALc3             -2329.51
 LME/SHFE ZINC                  LMESHFZNc3               436.06
 LME/SHFE LEAD                  LMESHFPBc3               569.28
 LME/SHFE NICKEL                LMESHFNIc3             -1377.41
 ($1 = 6.3627 Chinese yuan)

 (Reporting by Manolo Serapio Jr.
Editing by Joseph Radford)