Recasts and updates prices

By Julian Luk

June 18 (Reuters) -Copper prices rebounded from two-month lows on Tuesday as the dollar pared gains after slower growth in retail sales boosted the case for interest rate cuts by the U.S. Federal Reserve.

Three-month copper CMCU3 on the in London Metal Exchange was up 0.3% at $9,697 a metric ton by 1625 GMT, having earlier fallen to its weakest since April 18 at $9,551.

U.S. retail sales barely rose in May and data for the previous month was revised lower, suggesting lacklustre economic activity.

Earlier gains in the dollar were trimmed and softer consumption could help to tame inflation and bring forward a long-awaited Fed rate cut.

A weaker U.S. currency makes dollar-priced metals cheaper for holders of other currencies.

However, upside in copper prices has been limited by high inventories. Stocks in LME's registered warehouses climbed to a six-month peak after exchange data showed a massive copper delivery of 19,175 tons to Asian locations.

Inventory at LME-approved warehouses rose to 155,850 tons, pointing to fragile demand, data showed on Monday. MCUSTX-TOTAL

"Copper has been hit the hardest by the fading hopes of a global manufacturing recovery," said Julius Baer analyst Carsten Menke, who cited weakness in China's May industrial output and a slowdown in investment in metals-intensive assets.

Meanwhile, LME aluminium CMAL3 dipped 0.2% to $2,495.5 a ton after touching its lowest in nine weeks at $2,470.

"We think $2,450 is a good buying point. Aluminium's fundamentals are actually better than copper in the medium term," one trader said.

China's aluminium imports jumped 61.1% in May thanks to inflows from Russia, which is subject to Western sanctions.

Producers also offered to sell aluminum to Japan at premiums 25-31% higher than premiums in the current quarter.

Japanese buyers were asked to pay premiums of $185 to $190 a ton for July-September primary metal shipments over the LME cash price CMAL0, indicating strong demand.

In other metals, nickel CMNI3 fell 1% to $17,300 a ton, zinc CMZN3 dropped 1.1% to $2,847, lead CMPB3 jumped 1.9% to $2,196.5 and tin CMSN3 was down 0.3% at $32,230.

Reporting by Julian Luk in London
Additional reporting by Mai Nguyen
Editing by Jan Harvey and David Goodman

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