Corrects headline and first paragraph to say nickel touched $20,000 and not $2,000 per metric ton

May 6 (Reuters) - Copper prices rose on Wednesday as U.S. President Donald Trump signalled a potential peace agreement to end the war with Iran, easing concerns about its economic fallout, with nickel reaching $20,000 for the first time in about two years.

Benchmark three-month copper CMCU3 on the London Metal Exchange rose 1.1% to $13,284.50 per metric ton by 0804 GMT, its highest level since April 27.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 was up 1.6% at 102,660 yuan ($15,029.98) per ton. Chinese markets resumed trading on Wednesday following May Day holidays.

LME nickel CMNI3 climbed 1.4% to $19,915 a ton after touching $20,000, a level last seen in May 2024.

Stocks leaped, oil prices sank, and the dollar dropped after Trump said on Tuesday he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing "great progress" towards a comprehensive agreement with Iran. MKTS/GLOB

"What we're seeing at the moment is the hope that the conflict in the Middle East will continue to de-escalate and not disrupt the global economy too significantly," said Kyle Rodda, a senior market analyst at Capital.com.

"If you combine that with the fact that there is still this growing optimism about the AI buildout and other more structural and fundamental drivers of demand for copper, the risk is currently skewed to the upside."

LME aluminium prices CMAL3 were down 0.7% to $3,565.50 a ton on hopes of easing supply disruptions from the Gulf, which accounts for about 9% of global production of the metal.

Analysts at ANZ expect aluminium prices to remain skewed to the upside, trading above $3,400 per ton, as persistent supply losses are expected to widen the market deficit to 2.7mt in 2026 and over 1.1mt in 2027

"If the Strait of Hormuz reopens, prices may briefly dip, but renewed restocking by manufacturers should limit any significant downside."

Among other LME metals, lead CMPB3 was up 0.5%, tin CMSN3 climbed 6% and zinc CMZN3 gained 1.1%.

On the SHFE, aluminium SAFcv1 gained 1.2%, nickel SNIcv1 rose 3.5%, lead SPBcv1 gained 2%, zinc SZNcv1 was up 2.6%, while tin SSNcv1 climbed 8.4%.