May 29 (Reuters) - Shanghai copper rose on Friday, on track for a second straight monthly rise, as hopes of a U.S.-Iran peace deal pushed oil prices and the dollar lower, easing fears of higher inflation and a global slowdown.

The most-traded copper contract SCFcv1 on the Shanghai Futures Exchange was up 0.8% at 104,900 yuan ($15,472.55) as of 0324 GMT. The contract has gained 3.7% so far this month.

Three-month copper on the London Metal Exchange CMCU3 was unchanged at $13,699 a metric ton. Both the contracts were up for the second straight month.

The United States and Iran reached an agreement on Thursday to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters, though U.S. President Donald Trump has yet to approve it and Iranian state media said it had not been finalized.

"Base metals are benefiting from a more favourable macro backdrop," said Tim Waterer, chief market analyst at KCM Trade.

"A successful deal could open the door for stronger gains, while any breakdown risks reigniting inflationary pressures and capping upside."

The U.S. dollar .DXY is down 0.2% so far this week, making greenback-priced commodities cheaper for holders of other currencies. USD/

Crude oil prices fell more than 10% through Friday, on hopes of a durable deal between the U.S. and Iran that would reduce stagflation risk for the world economy, supporting the outlook for copper.

China's central bank has instructed banks to boost lending this month, people with knowledge of the matter said, in a further boost to copper market sentiment that underscores Beijing's continued efforts to support an economy squeezed by higher energy costs and stubbornly weak domestic demand.

"The broader trend for base metals remains favorable but expect highly volatile, choppy and news-driven trading in the upcoming trading sessions," said Jordan Chua, senior strategist at Phillip Nova.

Elsewhere on the LME, aluminium CMAL3 lost 0.1%, zinc CMZN3 rose 0.5%, lead CMPB3 was steady, nickel CMNI3 lost 0.6% and tin CMSN3 gained 0.2%. Aluminium was up for the third straight month on supply disruptions due to the conflict, while nickel was the only base metal that fell in May.

Among other SHFE metals, aluminium SAFcv1 rose 0.2%, zinc SZNcv1 was up 1.1%, lead SPBcv1 lost 0.5%, nickel SNIcv1 gained 0.1% and tin SSNcv1 rose 1.3%.

($1 = 6.7702 Chinese yuan)