SINGAPORE - London base metals edged higher on Tuesday, as the U.S. dollar weakened after Washington labelled Beijing a currency manipulator, marking a sharp escalation in the year-long trade dispute between the two economies.

A weaker dollar makes greenback-denominated metals cheaper for users of other currencies. However, gains were capped as rising tensions between the United States and China threatened global economic growth and demand for metals.

The U.S. Treasury Department said on Monday it had determined for the first time since 1994 that China was manipulating its currency, knocking the U.S. dollar sharply lower and sending China's offshore yuan to a record low. 

Three-month copper on the London Metal Exchange was up 0.3% at $5,704 a tonne, as of 0412 GMT, reversing a five-day losing streak, while Shanghai copper edged up 0.4% to 46,120 yuan ($6,547.97) a tonne.

"In August, we see prices trading between $5,520-$5,950; as we head deeper into the mid-5's," said INTL FCStone's independent commodity consultant Edward Meir in a note.

FUNDAMENTALS

* PRICES: London aluminium edged up 0.5%, nickel rose 0.3% and zinc advanced 0.8%. In Shanghai, aluminium rose 0.4%, nickel jumped 1.8%, while zinc eased 0.2%.

* NICKEL: A top Indonesian mining ministry official said on Monday he did not want to speculate on whether the government might bring forward a planned ban on mineral ore exports from 2022.

* FREE TRADE: China is planning a pilot project to drop all duties and ease procedures at its Shanghai Free Trade Zone, sources said, as Beijing looks to position itself as a leader in promoting free trade amid its trade war with Washington.

* LEAD: Supply disruptions and historically low inventories are unlikely to mean shortages of the auto battery metal lead due to sliding demand in top consumer China, where growth is under pressure because of the U.S.-China trade dispute.

* COPPER: Proposed U.S. tariffs against the European Union over aircraft subsidies could concentrate market control over some supplies of copper alloy in the hands of a German-owned firm and hurt American businesses, U.S. industry players said.

* LYNAS: Malaysia plans to extend Lynas Corp's licence to operate a rare earths processing plant, though it could be for a shorter duration than the usual three years, two sources with direct knowledge of the matter said.

* BHP/NICKEL: BHP Group is expanding its nickel business and plans to ramp up sales for the fast-growing electric vehicle sector, Asset President Eddie Haegel said on Monday.

* RUSAL: Russian aluminium producer Rusal suspended operations at its Achinsk alumina plant on Monday and evacuated all but essential staff after a fire broke out a nearby Russian military base, Rusal said.

 

($1 = 7.0434 Chinese yuan)

(Reporting by Mai Nguyen; Editing by Rashmi Aich and Sherry Jacob-Phillips) ((mai.nguyen@thomsonreuters.com; +6568703435; Reuters Messaging: mai.nguyen.thomsonreuters.com@reuters.net))