Copper prices bounced back on Friday, buoyed by hopes that the U.S. and ​Iran could sign ⁠a peace deal this weekend, helping ease concerns over rising inflation and slower economic growth. Benchmark ‌three-month copper on the London Metal Exchange gained 1.2% at $13,650 a metric ton in official open-outcry trading, snapping ​two days of losses that saw copper hit its lowest in three weeks.

Copper prices slid on Thursday amid ​one of ​the worst outbreaks of violence between the U.S. and Iran since the sides agreed to a ceasefire in April. A memorandum between the United States and Iran to ⁠halt the war in the Gulf could be signed as soon as Sunday, a Western source told Reuters on Friday.

"I've lost count of the number of peace deals, but at least the market is trying to build up some excitement about this one and hopefully they're right," ​said Ole ‌Hansen, head of ⁠commodity strategy at Saxo ⁠Bank in Copenhagen.

"The market is trying to bet that we're seeing a potential end to the inflation ​scare. Not that it's going to collapse, but at least it ‌could prevent it from rising further." The most-traded copper contract ⁠on the Shanghai Futures Exchange rose 1.2% to 104,660 yuan ($15,474.24) a ton, while U.S. Comex copper futures climbed 1.8% to $6.39 a lb.

Metals joined other markets reacting to the news as oil prices tumbled and global stocks gained. LME aluminium lagged copper, but rose 0.8% in official activity to $3,531 a ton, as a peace deal would relieve pressure on smelters in the Gulf that have been hit by disruptions.

The premium of the LME cash contract over the three month futures has collapsed to $6.05 a ton from $104.56 at the start of the ‌month when shortage concerns were at their peak.

"The sharp narrowing ... highlights ⁠the unwinding of extreme geopolitical risk premiums and speculative long positions ​as the market reassessed the extent and duration of supply disruptions," said Rupankar RM, head of market research and data intelligence at AL Circle. Among other metals, LME zinc advanced 1.8% to $3,560 a ton, lead ​added 0.5% ‌to $1,955, nickel gained 0.7% to $17,820 and tin rose 1.1% to $53,450.

($1 = 6.7635 Chinese ⁠yuan renminbi)

(Reporting by Eric Onstad; Additional reporting ​by Solomon Cefai in Singapore; Editing by Diti Pujara and Jonathan Ananda)