* LME/ShFE arb: tmsnrt.rs/2oQ5nm20 (Updates with closing prices)
By Peter Hobson
LONDON, Aug 31 (Reuters) - Copper prices rose to their highest in almost three years on Thursday, taking gains in August to 6.6 percent, after an acceleration in Chinese manufacturing boosted the outlook for demand in the world’s top metals consumer.
Copper was set to gain for a third consecutive month with aluminium, nickel and zinc on track for their biggest monthly increases since September 2012.
The Chinese factory data was “just another bullish story to throw into the pool of bullish sentiment that we have for base metals”, ING analyst Warren Patterson said.
However, he said prices were moving away from fundamentals as speculative investors poured into metals and disappointing data from China later in the year could provoke sharp falls.
LME COPPER: Benchmark copper on the London Metal Exchange closed up 0.3 percent at $6,788 a tonne after earlier touching $6,872, the highest since September 2014.
CHINA FACTORIES: China’s manufacturing growth unexpectedly accelerated in August, suggesting its economy is expanding strongly despite rising financing costs and a cooling housing market.
CONGRESS: The ruling Communist Party will hold a once-every-five-years congress starting on Oct. 18.
U.S. ECONOMY: Second-quarter growth and private-sector employment were strong, while consumer spending disappointed and inflation slowed, suggesting that interest rate rises may be delayed.
SPECULATORS: Brokers Marex Spectron said the net speculative long position in copper rose to 43 percent of open interest as of Friday, the most since 2004.
SUPPLY: However, supply concerns were reduced as output in Chile, the world’s biggest copper producer, increased in July and Indonesia agreed to allow Freeport-McMoRan Inc to keep operating its giant Grasberg copper mine.
CHINA STEEL: Chinese rebar steel and iron ore futures gained, continuing a months-long rally that has boosted industrial metals, particularly stainless steel ingredient nickel and galvanizing agent zinc.
NICKEL/ZINC: Benchmark nickel finished up 1.8 percent at $11,800 a tonne and zinc ended 1.6 percent higher at $3,146. Both metals were set for their best months since September 2012, with nickel up 15.4 percent in August and zinc 12.9 percent higher.
ALUMINIUM: Aluminium closed up 1.4 percent at $2,117 after hitting $2,139, the highest since February 2013. It was also set for its strongest month since September 2012, up 10.5 percent.
SUPPLY: Capacity cuts in China have driven aluminium higher, but Chinese producers are likely to ramp up production with prices at this level, ING’s Patterson said.
DOLLAR: Renewed dollar strength also threatens metals prices after a five-month run of weakness - that has helped metals by making them cheaper for holders of other currencies - ended in August.
PRICES: Lead ended 1 percent higher at $2,394 and tin finished up 0.3 percent at $20,670.
Additional reporting by Melanie Burton; Editing by Susan Thomas and Adrian Croft