Updates with official prices

By Polina Devitt

LONDON, June 30 (Reuters) - Aluminium prices on Tuesday were on track to log their steepest quarterly and monthly declines in years, as Middle East peace talks fuelled hopes that supply from the region would normalise.

Benchmark aluminium CMAL3 on the London Metal Exchange was up 0.7% at $3,110 a metric ton in official open-outcry trading, after hitting $3,085 on Monday, its lowest since February 23.

It was down 10% for the quarter, its steepest fall in three years, while slumping 15% in the month of June, the biggest monthly decline since the 2008 global financial crisis.

Tensions in the Middle East, a region that accounts for 9% of global output, pushed prices to a four-year high of $3,787.50 at the start of the month before peace talks drove oil prices lower and eased supply concerns.

Despite markets moving to price in an end to the war, traffic in the Strait of Hormuz, used by the Gulf producers for exports and imports of raw materials, remains heavily restricted, StoneX analyst Natalie Scott-Gray said in a note.

StoneX estimates that as much as 3 million tons of smelter capacity was taken offline since the war began. Coupled with some demand destruction in the coming months, mostly from the auto sector, it expects the aluminium market deficit at 1 million tons this year.

Among other LME metals, copper CMCU3 rose 0.6% to $13,364 a ton in official activity supported by upbeat factory data in top metals consumer China. The metal rose 8% during the quarter on future AI infrastructure expansion plans.

The correlation between the LME benchmark and the U.S. technology stocks hit its highest level since 2012 this quarter despite the end use in this sector at less than 2% of total demand, StoneX said.

Zinc CMZN3 rose 2% to $3,544 and was up 10% this quarter, its best in two years, due to tighter mine supply. It is the only LME metal ending June with the forward curve CMZN0-3 in backwardation.

Lead CMPB3 fell 0.5% to $1,884 and nickel CMNI3 rose 0.6% to $16,400, while tin CMSN3 added 1.8% to $51,300.