(Updates with closing prices) By Peter Hobson LONDON, Sept 26 (Reuters) - Copper prices fell on Thursdayas investors focused on a weak demand outlook and were scepticalof a suggestion by U.S. President Donald Trump that he couldsoon reach a trade deal with China.
Industrial metals were also caught in wider market moves asaccusations that Trump pressed Ukraine to investigate apolitical rival pushed down U.S. stocks and government debtyields. Trading activity was low ahead of a week-long holiday inChina, the biggest metals consumer, starting on Oct. 1.
Benchmark copper on the London Metal Exchange (LME)ended down 1.1% at $5,722 a tonne, near a two-year low of $5,518at the start of the month.
Trade disputes and weakening economic growth have hitindustrial metals prices despite deficits of some metalsincluding copper.
"Many market players do not buy yesterday's argument (byTrump) that a trade deal may be imminent," said Commerzbankanalyst Daniel Briesemann.
"They are waiting on the sidelines."
TRADE WAR: China's commerce ministry said preparations wereongoing to ensure "positive progress" after Trump on Wednesdaysaid a deal to end a nearly 15-month trade war with China couldhappen sooner than people think. CHINA MANUFACTURING: China's factory activity is expected tohave contracted for a fifth straight month in September, aReuters poll showed, adding to the country's economic woes. COPPER STOCKS: On-warrant stocks of copper available to themarket in LME-registered warehouses slid 20,725 tonnes to163,200 tonnes, the lowest since April 25. POSITIONING: Speculators held a short position in LME copperequal to 4% of open contacts as of Tuesday, down from 12% inJune, brokers Marex Spectron said. ZINC: Benchmark zinc closed up 0.4% at $2,299 atonne as on-warrant LME stocks sat at record lows and thepremium for cash metal over the three-month contract rose to$38.50, the highest since early July, pointing to tighter nearbysupply. Zinc hit a three-year low of $2,190 this month. A supplysqueeze has not pushed prices up more because investors expectsupply to pick up over the coming months while demand remainsweak, said analysts at ING.
NICKEL: Nickel finished down 0.7% at $17,210 atonne. On-warrant LME inventories this week hit the lowest since2008 and the premium for cash over three-month metal at $130 isnear a 10-year peak. ALUMINA: The Chinese city of Luliang imposed a temporary 50%production cut on alumina refineries, sending spot aluminaprices in North China to a 2-1/2-month high. OTHER METALS: Aluminium ended down 0.9% at $1,737 atonne, lead fell 0.7% to $2,093 and tin gained1.2% to $16,325.
(Reporting by Peter Hobson; Additional reporting by Tom Daly;Editing by Pravin Char and Lisa Shumaker)
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