* Copper builds on overnight gains
* Reverses early trading losses
* Zinc keeps positive tone (Adds comment, updates prices)
By James Regan
SYDNEY, Jan 11 (Reuters) - London copper built on hefty overnight gains on Wednesday, reversing early losses, while zinc also maintained a firmer tone, supported by supply concerns.
Zinc held its gains on the back of news that processing fees for China's zinc smelters hit record lows last month as supply from mines continued to dwindle. a steady U.S. dollar against other major currencies .DXY kept trading volumes and currency-based arbitrage activity light across the metals complex. Last week the index rose its highest since December 2002. copper on the London Metal Exchange CMCU3 gained 0.1 percent to $5,766 a tonne by 0300 GMT after initially easing at the start of trading. The contract galloped to a one-month high on Tuesday.
The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 2.8 percent to 47,070 yuan ($6,797) a tonne, gathering momentum on the back of a surge in Chinese producer prices in December. that is rising concerns of further supply-side disruptions.
Workers at Chile's Escondida copper mine - the world's biggest - have already rejected a wage offer from BHP Billiton (LON:BLT) BHP.AX .
Also, a proposed ban on the export of copper concentrates from Indonesia is due to come into force on Jan. 12. the government is expected to issue new export rules later this week, traders appear nervous," ANZ commodities strategist Daniel Hynes said in a note.
Three-month zinc CMZN3 was flat at $2,720 a tonne after touching its highest level in nearly a month in the more active London session. Shanghai zinc SZNcv1 rose 1.7 percent.
LME aluminium CMAL3 eased 0.1 percent to $1,747. ShFE aluminium SAFcv1 was up 2.1 percent.
LME nickel CMNI3 recoiled by 1 percent to $10,515 a tonne.
ShFE nickel SNIcv1 was 1.15 percent firmer.
PRICES
Three month LME copper
CMCU3
Most active ShFE copper
SCFcv1
Three month LME aluminium
CMAL3
Most active ShFE aluminium
SAFcv1
Three month LME zinc
CMZN3
Most active ShFE zinc
SZNcv1
Three month LME lead
CMPB3
Most active ShFE lead
SPBcv1
Three month LME nickel
CMNI3
Most active ShFE nickel
SNIcv1
Three month LME tin
CMSN3
Most active ShFE tin
SSNcv1
($1 = 6.9253 Chinese yuan renminbi)