By Polina Devitt
LONDON, July 5 (Reuters) - Copper prices in London hit their highest in more than three weeks on Friday, on course for the first weekly gain in seven weeks, with the outlook for U.S. interest rates supporting sentiment towards growth-dependent metals.
Three-month copper on the London Metal Exchange (LME) rose 0.6% to $9,945 a metric ton by 0938 GMT after hitting $9,967.5 for its highest since June 12. The contract is up 3.5% this week.
The dollar weakened on Friday on rising hopes that the U.S. Federal Reserve will cut interest rates, making dollar-priced metals more attractive for buyers using other currencies. The market is awaiting the U.S. non-farm payrolls data later in the day for further clues on the economy.
"We believe the Fed's interest rate path will continue to drive copper's short-term price outlook," said ING commodities analyst Ewa Manthey. "But if U.S. rates stay higher for longer, this would lead to a stronger U.S. dollar and weaker investor sentiment, which in turn would translate to lower copper prices."
Copper, used in power and construction, is down 10% since speculative buying took prices to a record high of $11,104.5 on May 20.
This decline revived some demand in top consumer China, tightening the discount to import copper into the country to $2 a ton from $20 in May. <SMM-CUYP-CN>
However, rising inventories were limiting potential for further copper gains. Inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.7% this week while LME data shows that stocks in the LME-registered warehouses have climbed to their highest since October. <MCUSTX-TOTAL> <CU-STX-SGH>
On the technical front, copper faces resistance from its 50-day moving average at $9,993.
In other metals, zinc was up 0.7% at $3,008 a ton after China's MMG halted a mill at its Dugald River zinc mine in Australia for about two months of repair work.
LME aluminium rose by 0.7% to $2,539 a ton, lead edged up 0.4% to $2,229.50, tin jumped 1.2% to $33,505 and nickel advanced by 1.1% to $17,395. (Reporting by Polina Devitt in London Additional reporting by Mai Nguyen in Hanoi Editing by David Goodman)