Updates prices at 1600 GMT

By Ashitha Shivaprasad

May 22 (Reuters) - Copper prices hit a three-week low on Thursday and other base metals also eased as uncertainty persists over economic conditions and demand growth.

Benchmark copper CMCU3 on the London Metal Exchange $(LME.AU)$ was down 0.4% at $9,498 a metric ton by 1600 GMT. Earlier in the session, prices touched their lowest since May 1 at $9,223.20.

"A real state of paralysis has swept through metals markets," said Alastair Munro at broker Marex, pointing to the expiry of LME benchmark contracts this week.

Prices have been pressured by a sharp rise in Chinese copper inventories CU-STX-SGH last week, ending a three-week run of large withdrawals. Analysts and traders said that the rise was due to tepid copper demand in China and steady output from a growing smelting sector.

Also weighing on the market was the prospect of more supply after Freeport Indonesia's Manyar smelter in East Java resumed operations ahead of schedule after a fire last year. It is expected to produce copper cathode by the fourth week of June.

Investor sentiment, meanwhile, remained subdued in the face of a deteriorating U.S. fiscal outlook, with last week's Moody’s downgrade fueling a growing “Sell America” narrative and leaving markets adrift.

Further dampening the market was a firmer U.S. dollar =USD after data showed U.S. business activity picked up in May, making dollar-priced metals more expensive for buyers with other currencies. USD/

LME lead CMPB3 was down 0.3% at $1,968 a ton after touching its lowest since May 9 at $1,947.50.

On-warrant LME lead inventories MPBSTX-TOTAL have surged by 91% over the past two days to 234,000 tons, their highest since December 2024.

Among other metals, aluminium CMAL3 dropped 0.6% to $2,456 a ton, nickel CMNI3 was down 0.6% at $15,510, tin CMSN3 fell 1.2% to $32,455, while zinc CMZN3 added 0.3% to $2,702.

(Reporting by Ashitha Shivaprasad in BengaluruEditing by David Goodman)

((Ashitha.Shivaprasad@thomsonreuters.com;))

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