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METALS-Copper touches one-week high; zinc sinks to lowest since Sept

* Zinc hits lowest in nearly eight months

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Updates with closing prices, adds analyst comment on zinc)

LONDON, May 3 (Reuters) - Copper rose on Thursday as the dollar weakened and the market waited for cues from China-U.S. trade talks underway in Beijing.

The world’s two biggest economies have imposed import tariffs on each other’s goods, including Chinese aluminium and U.S. aluminium scrap, and threatened more action in a trade dispute that has roiled metals markets.

Copper closed up 0.1 percent at $6,827 a tonne, after touching a one-week high of $6,792 and marking the second straight session of gains.

“The dollar is a little weaker this morning, meaning higher metal prices, and that is what we see across the board in precious metals as well,” said Julius Baer analyst Carsten Menke.

He added that trade talks between China and the United States could drag on for weeks and that the first round of talks were unlikely to yield much.

TRADE: A U.S. trade delegation arrived in Beijing on Thursday for tariffs talks, with Chinese state media saying that China will stand up to U.S. bullying if needed, but that it is better to work things out at the negotiating table.

DOLLAR: The dollar index slipped from four-month highs in the morning but was choppy in later trading, weighing on metals. A weaker greenback makes dollar-denominated commodities cheaper for non-U.S. firms.

The dollar recovered after data showed the U.S. trade deficit narrowed sharply in March and the number of Americans receiving unemployment aid fell to its lowest level since 1973 .

ZINC: Benchmark zinc ended down 1.3 percent at $3,007 a tonne after sinking to $2,994, the lowest since Sept. 15 last year after treatment charges were agreed.

ZINC TREATMENT CHARGES: The zinc industry agreed a 15 percent drop in annual zinc processing fees to $147 a tonne, miner and metals smelting company Nyrstar said.

ING analyst Oliver Nugent said in a note that the settlement showed the zinc market was at a turning point and “reflects expectations that mine supply will soon loosen significantly”.

STOCKS: Headline inventories of zinc in LME-approved warehouses dropped by 225 tonnes to 236,775 tonnes. The amount of cancelled inventory - stock earmarked for delivery - was very low at 5.6 percent, LME data showed. MZNSTX-TOTAL

PRICES: Aluminium shed 2.3 percent to close at $2,269 a tonne, lead fell 0.4 percent to $2,260, tin rose 0.6 percent to finish at $21,205 and nickel lost 1.5 percent to $13,775.

Additional reporting by Tom Daly in Beijing and Eric Onstad in London Editing by Larry King