* Copper cancelled warrants help boost prices
* Zinc touch 3-month high, nickel touches 4-month high (Updates with closing prices)By Pratima DesaiLONDON, Jan 31 (Reuters) - Copper prices hit seven-weekhighs on Thursday as the dollar slipped after the U.S. centralbank signalled further interest rate rises could be shelved, butgains were capped by shrinking activity in China's manufacturingsector.Benchmark copper on the London Metal Exchange endedup 0.5 percent at $6,169 a tonne. Earlier the metal, used widelyin power and construction, touched $6,199 a tonne, its highestsince Dec. 13."Copper will ultimately be driven by economic and industrialproduction growth in China, where lead indicators like creditgrowth and capital investment are slowing," said Liberum analystRichard Knights.
RATES: The Federal Reserve left interest rates unchanged onWednesday and discarded its promises of "further gradualincreases". Fed Chairman Jerome Powell said the case for raterises had "weakened" in recent weeks. That weighed on the U.S. currency, which when it falls makesdollar-denominated assets cheaper for holders of othercurrencies. CHINA: China's manufacturing sector contracted for thesecond straight month in January. Even with government effortsto spur activity, concerns are growing that China may be at riskof a sharper-than-expected slowdown if the trade war with theUnited States drags on.DEMAND: China accounts for nearly half of global copperconsumption estimated at around 24 million tonnes this year.GROWTH: China's economy grew at the weakest pace in nearlythree decades last year due to weak domestic demand and thetrade dispute with the United States. WARRANTS: Copper has also been helped by worries about atight LME market as cancelled warrants - metal earmarked fordelivery from LME registered warehouses - at 44,125 tonnes makeup nearly 30 percent of total stocks. NICKEL: Prices of the stainless steel material were up 1.0percent at $12,480 a tonne from an earlier three-month high at$12,515 a tonne. Its rise has been fuelled by falling LME stocksand worries about disrupted supply from Brazil's Vale . But the discount for the cash contract against thethree-month at nearly $70 a tonne indicates the marketis not concerned about nearby supplies.ZINC: Prices of the metal used to galvanise steel gained 1.2percent to $2,718 a tonne. Earlier, it touched a seven-monthhigh at $2,737, partly due to concerns about falling supply fromChina due to an environmental crackdown.
"(A) combination of poor profitability and difficulties incomplying with environmental regulations resulted in Chinesesmelter production (last year) falling to its lowest level since2013," Wood Mackenzie analysts said in a note.PRICES: Aluminium was little changed at $1,910 atonne, lead climbed 1.0 percent to $2,112 and tin rose 0.2 percent to $20,850 a tonne.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS Fickle nickel: Metal goes from Q4 laggard to January pacesetter ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Pratima Desai; Editing by Mark Potter and DavidEvans)