Lead hits three-year peak after German plant shuts, copper firm

(Updates prices)

LONDON, July 21 (Reuters) - Lead prices surged to a three-year high on Wednesday after a major lead smelter in Germany halted operations due to flooding.

Berzelius Stolberg declared force majeure on metal shipments from its plant in western Germany, the biggest primary lead smelter in Europe.

Three-month lead on the London Metal Exchange had gained 0.3% to $2,336 a tonne by 1630 GMT after touching $2,350, the highest since July 2018. It was earlier in negative territory.

Meanwhile, copper prices rebounded after China's announcement of a second sale of state reserves with an amount that was less then expected and the dollar eased.

LME copper rose 0.2% to $9,351.50 a tonne after earlier falling to a low of $9,260.50.

China will sell 30,000 tonnes of copper and other base metals on July 29 as Beijing aims to rein in skyrocketing commodity prices, a government body said.

"There were rumours in the market that there would be a high number, but the announcement was lower than expectations," said Wenyu Yao, senior commodities strategist at ING Bank.

* The premium of LME cash lead over the three-month contract CMPB0-3 hit a near three-week high of $17.50 a tonne, indicating tightening nearby supply. LME inventories MPBSTX-TOTAL fell to a one-year low of 64,425 tonnes.

* The dollar index pulled back from more than three-month highs, making metals priced in the U.S. currency cheaper to holders of other currencies.

* The Yangshan copper premium SMM-CUYP-CN rose to $40 a tonne, its highest since May 7, indicating strengthening demand for imported metal into China.

* The global nickel market deficit widened to 21,300 tonnes in May compared a shortfall of 20,400 tonnes in April, data showed.

* LME aluminium eased 0.2% to $2,460.50 a tonne, zinc dropped 0.8% to $2,937, nickel lost 0.5% to $18,590 and tin edged up 0.1% to $33,540.

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