Adds analyst comment, updates prices, changes dateline

By Eric Onstad

LONDON, June 12 (Reuters) - Copper prices bounced back on Friday, buoyed by hopes that the U.S. and Iran could soon reach a peace deal, helping ease concerns over rising inflation and slower economic growth.

Benchmark three-month copper CMCU3 on the London Metal Exchange gained 1.6% to $13,704 a metric ton by 0925 GMT, 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.

Prices reversed after U.S. President Donald Trump said that a peace deal could be signed as soon as this weekend, although Iran said no final decision had been made on a pact.

"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 SCFcv1 rose 1.2% to 104,660 yuan ($15,474.24) a ton.

Metals joined other markets reacting to the news as oil prices tumbled and global stocks gained. MKTS/GLOB

LME aluminium CMAL3 lagged copper, edging up 0.3% to $3,513 a ton as a peace deal would relieve pressure on smelters in the Gulf, which have been hit by disruptions, sending prices higher.

The premium of the LME cash contract over the three month futures CMAL0-3 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 CMZN3 advanced 1.5% to $3,549.50, lead CMPB3 added 0.8% to $1,959.50, nickel CMNI3 gained 1.1% to $17,880 and tin CMSN3 rose 1% to $53,400.

($1 = 6.7635 Chinese yuan renminbi)