Feb 17 (Reuters) - Copper prices touched three-week highs on Monday as top consumer China lowered a key interest rate to cushion the impact from the coronavirus outbreak.
China's central bank lowered the rate on 200 billion yuan worth of one-year medium-term lending facility (MLF) loans. The bank said on Saturday Chinese lenders will tolerate a higher level of bad loans to support firms hit by the epidemic, which has killed over 1,700 people and infected about 70,550 in China.
"The MLF cut is to try to bring the official rate closer to the shadow banking rates, so that less bad loans will surface in the future," a Singapore-based metals trader said.
"Copper getting bid up ... is a testament to a sub-section in the economy used as a conduit to get loans for firms to refinance other liability or just to operate," the trader said.
Three-month copper on the London Metal Exchange (LME) touched a three-week peak of $5,828.50 a tonne in early trade. It was up 0.9% at $5,812.50 a tonne by 0730 GMT.
The most-traded copper contract on the Shanghai Futures Exchange (ShFE) closed up 1% at 46,310 yuan ($6,633.72) a tonne, the highest since Jan. 23.
FUNDAMENTALS
* PRICES: LME aluminium dipped 0.2% to $1,719 a tonne, nickel rose 1.3% to $13,190 a tonne and zinc climbed 0.7% to $2,164.50 a tonne. ShFE aluminium fell 0.4% to 13,645 yuan a tonne and nickel dropped to as low as 104,300 yuan a tonne, the lowest in nearly a week.
* NICKEL: The difference between LME cash over the three month nickel contract MNI0-3 has been at discount since mid-November, signaling amply nearby supplies.
* Fitch Solutions lowered its forecast for LME three-month nickel price in 2020 to an average of $14,000 a tonne, from $15,000 previously, on easing supply concerns and negative sentiment on metals due to the virus outbreak.
* AUTOS: China's auto market, the world's largest, could see sales slide over 10% in the first half of 2020 due to the epidemic, its top auto industry body said.
