Updates prices

By Mai Nguyen

Aug 22 (Reuters) -Copper prices rose on Thursday, supported by falling metal inventories, easing worries over a potential U.S. economic recession and demand showing signs of improvement in China.

The most-traded September copper contract on the Shanghai Futures Exchange SCFcv1 closed up 0.2% at 73,880 yuan ($10,359.24) a metric ton.

Three-month copper on the London Metal Exchange CMCU3 rose 0.1% to $9,264.50 a ton at 0705 GMT.

"The macroeconomic backdrop is not looking as gloomy as recently feared. Fundamentals are showing signs of improvement too," said ANZ analyst Soni Kumari, referring to possible output cuts for copper, aluminium, nickel and zinc.

Earlier this month, fears of a looming U.S. recession pressured LME copper price to its lowest since March at $8,714 a ton. But the cheaper metal price boosted physical demand, and more positive U.S. data recently eased worries about a hard landing.

"Inventories are retreating and contango forward curve is narrowing... suggesting a tighter market. Downstream demand is showing signs of improvement as well for copper and aluminium," Kumari said.

SHFE copper inventories CU-STX-SGH fell 8% last week, the biggest weekly fall since December last year. LME inventories MCUSTX-TOTAL have also eased recently.

SHFE zinc SZNcv1 climbed as much as 1.7% to 23,795 yuan a ton, its highest since July 18. LME zinc CMZN3 rose to as high as $2,870 a ton, a level unseen since July 17.

Bloomberg reported on Wednesday that Chinese zinc smelters were discussing possible output cuts after tight supplies of concentrates forced spot processing fees into negative territory.

"Chinese smelters are suffering big financial losses now with such low treatment charges and a few smelters that cannot obtain enough concentrates have to cut production," said CRU analyst Dina Yu.

LME nickel CMNI3 fell 0.9% to $16,755 a ton, while tin CMSN3 rose 0.3% to $32,805, aluminium CMAL3 increased 0.3% to $2,493.50 and lead CMPB3 rose 0.3% to $2,092.

SHFE aluminium SAFcv1 rose 0.6% to 19,870 yuan a ton, tin SSNcv1 increased 1.1% to 267,170 yuan while nickel SNIcv1 fell 1.7% to 128,700 yuan and lead SPBcv1 shed 0.8% to 17,480 yuan.

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($1 = 7.1318 yuan)

Reporting by Mai Nguyen in Hanoi; Editing by Rashmi Aich and Mrigank Dhaniwala

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