* Available LME copper stocks at lowest since July 2005
* Dollar hits three-week low, underpins copper (Recasts, adds closing prices)
By Maytaal Angel
LONDON, Feb 26 (Reuters) - Copper steadied on Tuesday as a weak dollar and dwindling stocks lent support, with investors also still cheering signs of progress in U.S.-China trade talks.
The latest London Metal Exchange data showed that available, or “on-warrant”, copper stocks have slipped to only 29,775 tonnes - their lowest level since July 2005. MCU-STOCKS
The dollar, meanwhile, sank to a three-week low after Federal Reserve Chairman Jerome Powell suggested he was unlikely to raise interest rates anytime soon.
A weaker dollar makes dollar-priced metals cheaper for non-U.S. investors.
“The market was focused on the dollar, Chinese data and the (U.S.-China) trade deal - and on all three, people have become a bit more confident,” said Michael Widmer, analyst at Bank of America Merrill Lynch.
He added that with copper mine supply tight, disruptions escalating and demand set to hold up, he is forecasting a small deficit this year and an average third-quarter price of $6,750 a tonne.
* COPPER PRICE: Three-month copper on the London Metal Exchange ended 0.2 percent up at $6,494 a tonne, having hit its highest since July 4 at $6,540 a tonne on Monday.
* TRADE: U.S. President Donald Trump last weekend deferred plans to increase tariffs on Chinese goods, citing progress in talks with Beijing.
* POSITIONS: LME data showed one entity holds more than 90 percent of copper cash contracts and warrants <0#LME-WHC>. This has pushed cash copper to a premium of $44.50 against the three-month price. CMCU0-3
* TECHNICALS: LME copper could break resistance at $6,525 a tonne and rise to $6,662 in a week, as suggested by its wave pattern and a projection analysis.
* CHINA DATA: Factory activity in China is expected to have contracted for the third month in a row in February, a Reuters poll showed.
* ZINC STOCKS: Zinc ended 0.8 percent up at $2,740 a tonne, having hit its highest since early February. LME zinc stocks fell by 8,925 tonnes to 69,475 tonnes, the lowest since October 2007, data showed.
* ZINC DEMAND: Deliverable stockpiles at the LME are close to only a day’s worth of demand and rebuilding holdings could require a full-blown global recession, according to ICBC Standard Bank.
* OTHER METALS: Aluminium closed 0.2 percent up at $1,911 a tonne, lead gained 0.3 percent to $2,092.50, tin was down 0.6 percent at $21,600 and nickel ended with a 0.1 percent decline at $12,960.
Additional reporting by Tom Daly Editing by Edmund Blair and David Goodman