Updates prices and Iran news at 1600 GMT

By Eric Onstad

LONDON, May 29 (Reuters) - Copper prices edged lower on Friday as investors awaited more news about a potential deal to extend a ceasefire in Iran and as the dollar firmed.

Benchmark three-month copper CMCU3 on the London Metal Exchange slipped 0.6% to $13,624.50 a metric ton by 1600 GMT after gaining 1.3% in the previous session.

LME copper rebounded on Thursday on the back of news that the U.S. and Iran reached a preliminary agreement to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz.

U.S. President Donald Trump said he would make a final decision on Friday on the deal while Iranian state media said Tehran was in the final stages of ratification.

"Copper is drifting lower today, it seems like we've got some profit-taking. We've certainly had a small uptrend for the last two weeks, but it's stalling a bit," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

LME copper is on track to add about 5% this month, the second straight month of gains, largely on hopes for a deal to end the Iran war and signs of firmer demand.

Copper was also supported by the continued flow of metal to the U.S. as traders took advantage of a slight premium of U.S. futures over those in London.

U.S. Comex copper futures HGc2 shed 0.4% to $6.40 a lb, bringing the premium of Comex over LME copper to 3.5% or $483 a ton.

"If you take copper out of the market into the U.S. then that helps to tighten the overall global market, so it's difficult not to paint a picture of underpinned and supported prices going forward," Hansen said.

LME aluminium CMAL3 rose 0.2% to $3,666 a ton, and the premium of the LME cash contract over the three-month futures CMAL0-3 climbed to a 19-year high of $97 a ton, highlighting worries about potential shortages the war is causing in the Gulf, which accounts for about 9% of global output.

Among other metals, LME zinc CMZN3 gave up 0.4% to $3,535.50 a ton, nickel CMNI3 slipped 0.6% to $18,985 and lead CMPB3 dipped 0.1% to $2,017 while tin CMSN3 edged up 0.1% to $55,140.