February 11, 2019 / 3:11 PM / 8 days ago

METALS-Zinc hits two-week low on worries about China-U.S. trade

* No talks between Trump, Xi before March trade deadline

* Speculators target zinc after breaches key technical level

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Adds technicals on lead, updates prices)

By Eric Onstad

LONDON, Feb 11 (Reuters) - Zinc slumped to a two-week low and other industrial metals also fell as speculators sold in response to concerns about U.S.-China trade talks and global growth.

China expressed anger on Monday at a U.S. Navy mission through the disputed South China Sea after U.S. President Donald Trump said last week he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline for a trade deal.

Chinese investors, returning after a week-long national holiday, seemed to focus more on downbeat news than optimism China expressed on Monday about a new round of trade talks with the United States.

“You had seen quite a run-up in base metals prices, with lots of positivity on the trade negotiations, and now that balloon seems to have been punctured somewhat,” said Ross Strachan, senior commodities economist at Capital Economics in London.

“There seems to be more realisation that trying to get a permanent long-term deal between those two parties is extremely difficult to imagine.”

Benchmark zinc on the London Metal Exchange had shot up nearly a fifth in the month to Feb. 5, when it touched a seven-month peak of $2,810 a tonne.

But since then it has slipped 6 percent and was the biggest LME decliner on Monday, down 2.4 percent to $2,640 a tonne by 1500 GMT. Earlier it touched $2,631, the lowest since Jan. 25.

* ZINC STOCKS: Investors apparently brushed off news that LME zinc inventories MZNSTX-TOTAL have eroded further to a fresh low since January 2008.

* ZINC TECHNICALS: Zinc attracted additional selling due to a weak chart picture, Matt France at broker Marex Spectron in Singapore said in a note. “Zinc looks most vulnerable technically as it has breached the 200-day moving average at $2,660.”

* COPPER: Three month LME copper shed 1.1 percent to $6,142 a tonne after Chilean state miner Codelco said on Saturday it hoped to soon restart operations at its Chuquicamata copper mine.

* LEAD: LME lead gave up 0.9 percent to a two-week low of $2,061 a tonne.

A pullback in lead is expected to be short-lived, Stéphanie Aymes, head of technical analysis at Societe Generale, said in a note. “Once a move beyond $2,132/35 takes shape, lead will extend the recovery towards $2,185 and perhaps even towards the May 2018 trough at $2,241/28.”

* DOLLAR: Also weighing on metals was a stronger dollar, making dollar-denominated metals more expensive for holders of other currencies.

* PRICES: Aluminium dropped 0.9 percent to $1,864 a tonne, nickel fell 1 percent to $12,445 a tonne and tin declined 0.4 percent to $20,970.

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Additional reporting by Enrico Dela Cruz in Manila and Muyu Xu in Beijing. Editing by Louise Heavens and David Evans

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