* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl
* Discount for cash against 3-month aluminium narrows (Updates with official prices, U.S. data and nickel)
By Pratima Desai
LONDON, July 1 (Reuters) - Copper prices hit six-week highs on Monday as sentiment turned positive after the United States and China agreed a trade truce, but weak manufacturing data reinforced expectations of slowing economic activity and demand.
Benchmark copper on the London Metal Exchange ended down 0.6% at $5,955 a tonne. Prices of the metal, used widely in power and construction industries, earlier touched $6,075, the highest since May 20.
“We now have a ceasefire in the trade war. There is reason to be optimistic about a positive impact on global manufacturing and metals demand,” said Danske Bank analyst Jens Pederson. “But we have had some quite downbeat economic data, PMIs have fallen just about everywhere.”
TRADE: The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on technology company Huawei.
But no deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.
“Existing tariffs will remain in place for the length of the talks and given how unpredictable the trade war has been so far, it is very unlikely that such a truce will give much confidence to firms,” analysts at NAB said in a note.
“As such, it is likely that the softening in global manufacturing conditions continues until a fuller agreement is fleshed out.”
PMIS: China’s factory activity unexpectedly shrank in June as domestic and export demand faltered, a private sector business survey showed on Monday, pointing to further strains on its vast manufacturing sector.
Manufacturing activity also shrank in most Asian and European countries in June.
Growth in U.S. manufacturing activity slowed to its lowest level in more than a 2-1/2 years in June, with a measure of new orders received by factories tumbling, according to the Institute for Supply Management (ISM).
TECHNICALS: Upside resistance for copper comes in at $6,080-$6,090, near the 50-day moving average.
ALUMINIUM: Aluminium stocks at 989,125, a drop of 22% since early May, and one company holding large amounts of warrants — between 40% and 49% — is fuelling concern about nearby supplies on the LME market. <0#LME-WHL> MALSTX-TOTAL
Worries are reinforced by cancelled warrants — metal earmarked for delivery — at 35% of total stocks.
This can be seen in the narrowing discount for the cash over the three-month contract, which closed at $20 a tonne CMAL0-3 on Friday from levels near $31 on June 14.
Three-month aluminium slipped 0.3% to $1,794 a tonne. Last month it touched a 2-1/2 year low of $1,745.
PRICES: Zinc closed down 1.3% at $2,462, lead fell 1.3% to $1,906, tin rose 0.4% to $18,900 and nickel was down 2.7% at $12,350 a tonne.
NICKEL: Traders said nickel’s large losses on Monday were due to profit-taking after large gains this year and a break of the 100-day moving average around $12,540.
Reporting by Pratima Desai; Editing by Jane Merriman and Mark Potter