May 15, 2019 / 10:30 AM / 11 days ago

METALS-Copper gains as hopes for trade deal outweigh soft Chinese data

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices)

By Eric Onstad

LONDON, May 15 (Reuters) - Copper extended its rebound on Wednesday as hopes the United States and China would forge a trade deal overshadowed largely disappointing economic data from top metals consumer China.

Aluminium, however, slipped after Chinese output gained, fanning fears of oversupply.

U.S. President Donald Trump called the trade war with China “a little squabble” and said a deal would be finalised when the “time is right”.

“It looks as if the macro news out of the U.S. concerning the trade talks seems to be trumping all of the more negative news, including the Chinese data for April which was a reversal of the good data we had in March,” said Robin Bhar, head of metals research at Societe Generale in London.

China reported surprisingly weaker growth in retail sales and industrial output for April on Wednesday, adding pressure on Beijing to roll out more stimulus.

“The silver lining is that as the China data remains weak the government will have to respond with interest rate cuts and more fiscal stimulus, so that suggests that the second half of the year could be a lot better in terms of Chinese growth,” Bhar said.

Three-month copper on the London Metal Exchange climbed 1% to $6,085 a tonne in closing open outcry trading after hitting a 3-1/2 month low on Monday.

* ALUMINIUM: Benchmark LME aluminium ended up 0.5% at $1,855 a tonne, recovering from earlier losses after China reported output of aluminium for April rose 3.9% from the same time last year to 2.92 million tonnes.

“Overproduction will be the trend going forward and will have a negative impact on aluminium prices. The economy is slowing down, demand is not strong,” said analyst Helen Lau of Argonaut Securities in Hong Kong.

* TIN STOCKS: LME tin rose 0.3% to finish at $19,845 a tonne, bouncing back from the red after LME inventories MSNSTX-TOTAL jumped 23% in one day.

* NICKEL: LME nickel, untraded in closing rings, climbed 2.1 percent $12,150 a tonne in electronic trading by 1600 GMT, helped by chart-based signals. “This morning the market has breached the down trend from $13,160 high on 17th April although likely to find resistance into $12,070 high from 10th May,” Alastair Munro at broker Marex Spectron said in a note.

* GERMAN ECONOMY: Sentiment was helped after data showed Europe’s biggest economy Germany returned to growth in the first quarter as householders spent more freely and construction activity picked up.

* ZINC OUTLOOK: Ross Strachan at Capital Economics said in a note that investor sentiment was expected to deteriorate further. “In particular, zinc is vulnerable to further selling as its net (long) position is almost at its 2018 average, unlike the other base metals, which are far below, and it has the most bearish supply prospects.”

* PRICES: LME zinc rose 1.2% to close at $2,626 a tonne while lead gained 0.6% to $1,813.50 a tonne.

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Additional reporting by Mai Nguyen in Singapore Editing by Louise Heavens/Mark Heinrich/Kirsten Donovan

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