METALS-U.S. aid talks and Chile strike propel copper to two-week peak

* Discount for cash vs three-month aluminium narrows

* More aluminium due to leave LME storage

* China data coming into focus (Updates prices)

LONDON, Oct 9 (Reuters) - Copper prices rose to two-week highs on Friday after talks about financial aid for the U.S. economy restarted, the dollar slipped and miners went on strike in Chile, a top producer of the industrial metal.

Benchmark copper on the London Metal Exchange was up 1.3% higher at $6,768 a tonne at 1601 GMT. Prices earlier rose to $6,781 a tonne, the highest since Sept, 22 and not far off the 27-month high of $6,877.5 hit last month.

“President Donald Trump making a U-turn on the aid package, the weaker dollar and China back from holiday are all helping to push prices up,” said Commerzbank analyst Daniel Briesemann.

“The strike at Lundin Mining is not expected t0o have a material impact on production, but people are waiting to see the outcome of the negotiations and what that means for other wage talks coming up in Chile.”

US AID: Trump said talks with Congress about further financial aid for the U.S. economy hit by the COVID-19 crisis had ressumed, after he ended negotiations earlier this week.

CHILE: A union of workers at Lundin Mining’s Candelaria copper mine in Chile walked off the job on Thursday after talks broke down.

DOLLAR: The dollar fell to its lowest in nearly three weeks on Friday. A lower U.S. currency makes dollar-priced metals cheaper for holders of other currencies, which could help boost demand.

CHINA: Markets will scrutinise loans, total social financing and trade data due next week from China, which accounts for about half of global consumption of industrial metals.

ALUMINIUM: The discount for cash over the three-month aluminium CMAL0-3 contract narrowed to $13.8 a tonne, the lowest since early March.

The contraction was due to falling stocks MALSTX-TOTAL in LME approved warehouses, which at 1.416 million tonnes are down 15% since July, and large holdings of aluminium warrants <0#LME-WHL>.

Three-month aluminium was up 2.6% at $1,852 a tonne from an earlier $1,855.50, the highest since July 2019.

OTHER METALS: Zinc climbed 2.6% to $2,426, lead rose 1% to $1,810, tin added 0.6% to $18,250 and nickel gained 3.8% to hit $15,220. (Reporting by Pratima Desai; Editing by Emelia Sithole-Matarise and David Clarke)