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Biggest weekly gain since 2018 lifts copper to pre-coronavirus levels

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(Updates prices) LONDON, July 10 (Reuters) - Copper was set for its weekly biggest rise in more than two years on Friday, with prices surging to pre-coronavirus crisis levels as Chinese demand rebounds and speculators turn bullish on the metal.

Benchmark copper on the London Metal Exchange (LME) was up 1.9% at $6,417 a tonne at 1600 GMT.

It was up more than 6.6% this week -- its eighth consecutive weekly gain and the biggest since February 2018 -- and trading at its highest since May 2019, having risen from a low of $4,371 in March. "Chinese demand seems to be coming back not just quickly but quicker than most people expected," said Capital Economics analyst Kieran Clancy. "There's also starting to be a supply risk priced into the copper price. "In some countries, particularly in Latin America, which produces half the world's copper ore, restrictions are being lifted at a time when infections are rising," he said.

CHINA: New bank lending in China, the biggest metals consumer, rose 22.3% to 1.81 trillion yuan ($258.29 billion) in June. FED: U.S. producer prices unexpectedly fell, pointing to subdued inflation that should allow the Federal Reserve to keep pumping money into the economy. POSITIONING: Speculators' net long in LME copper rose to 12.4% of active contracts by Wednesday, brokers Marex Spectron said.

ShFE STOCKS: Copper stocks in Shanghai Futures Exchange warehouses increased by 20,018 tonnes to 137,336 tonnes in the week to Friday, but remain far below their peak in March. LME STOCKS: On-warrant stocks in LME-registered warehouses fell by 6,200 tonnes to 88,600, the lowest since Jan. 16. SPREAD: Cash copper has flipped to a premium against three-month metal on the LME, suggesting tighter nearby supply.

ALUMINIUM: The premium for aluminium shipments to Japanese buyers for July to September was set at $79 a tonne, down 3.7% from the previous quarter, sources said.

OTHER METALS: LME aluminium was up 1.3% at $1,686 a tonne, zinc was 1.6% higher at $2,189.50, nickel rose 2.1% to $13,520, lead gained 1.1% to $1,858 and tin was unchanged at $17,340. All were up this week.

(Reporting by Peter Hobson Additional reporting by Tom Daly Editing by Edmund Blair, Louise Heavens and Frances Kerry)

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