March 2, 2017 / 3:07 AM / 6 months ago

METALS-London copper steadies as demand view supports

* Strike continues at Noranda zinc processing plant in Canada

* Workers at Chile's Escondida block a highway

* Coming up: euro zone inflation for Feb at 1000 GMT (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, March 2 (Reuters) - London copper was steady on Thursday near a one-week high as a strong dollar weighed against improving manufacturing reports out of Asia and the United States that brightened the outlook for demand.

China's factory activity expanded faster than expected in February as domestic and export demand picked up, while South Korea's industrial production surged at its quickest pace in over seven years in January.

"Positive economic data and further supply-side issues should see metal prices well supported today," ANZ said in a report.

London Metal Exchange copper traded little changed at $6,017 a tonne by 0714 GMT, holding near a 0.7 percent gain from the previous session when prices marked their strongest since Feb. 21 at $6,090 a tonne.

Shanghai Futures Exchange copper finished up 0.8 percent at 48,690 yuan ($7,072) a tonne.

A three-week-long strike at Chile's Escondida copper mine, the world's biggest, turned ugly on Wednesday when a group of striking workers blocked a highway, provoking confrontations with the police.

U.S. consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years, raising the probability of an interest rate hike from the Federal Reserve this month.

Expectations of a rate hike propelled the dollar higher and dampened some interest in metals, as the rising greenback makes them more expensive for buyers holding other currencies.

In zinc news, Noranda Income Fund said it was deferring its 2017 zinc production and sales forecasts due to an ongoing strike by workers at its Quebec processing plant, the second-largest in North America.

Meanwhile, China has ordered steel and aluminium producers in 28 cities to slash output during winter, outlined plans to curb coal use in the capital and required coal transport by rail in the north, as Beijing intensifies its war on smog, a policy document shows.

LME aluminium prices rallied 1.3 percent on Wednesday to hit the highest in more than 20 months at $1,957 a tonne. Prices on Thursday retraced some of those gains to $1,941.

The market's attention will now shift to the outcome of a China leadership meeting at the weekend at which further policies to curb air pollution and possibly speculation in commodities markets may be unveiled.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

$1 = 6.8851 Chinese yuan renminbi Reporting by Melanie Burton; Editing by Joseph Radford and Christian Schmollinger

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