* Premium for cash over 3-month zinc turns into discount
* Zinc stocks in LME registered warehouses climb (Adds official prices)
By Pratima Desai
LONDON, Feb 11 (Reuters) - Prices of industrial metals bounced on Tuesday as funds cut bets on lower prices, but the mood was dominated by nervousness about China, where the impact of the coronavirus is expected to sap demand.
Benchmark copper on the London Metal Exchange was untraded in official rings, but bid up 0.8% at $5,713 a tonne. Prices of the metal seen by investors as a gauge of economic health fell to a five-month low of $5,523 last week, a drop of 13% since Jan. 16.
"It's only a minor correction, there is nothing fundamental behind it," BMO Capital analyst Timothy Wood-Dow said of Tuesday's change.
"There is a lot of uncertainty, we need to wait until the end of the week, maybe even next week to see a clearer picture of what is going on in China."
VIRUS: China's coronavirus outbreak may peak soon, a prominent Chinese expert said, as the death toll soared above 1,000. He added that the number of new cases was already declining in some provinces.
Traders said these comments and the re-opening of some factories in China were partly behind funds covering their short positions or bets on lower base metal prices.
CHARGES: Treatment and refining charges paid by miners to smelters to process copper ore into refined metal <AM-CN-CUCONC>, climbed to $62.50 a tonne and 6.25 cents a lb on Monday, as assessed by industry pricing and information provider Asian Metal.
Smelters in China need less concentrate after factory shutdowns and transport curbs mean they have not been able to sell the byproduct sulphuric acid, limiting their capacity to produce more copper.
SPREADS: The premium for the cash over the three-month zinc contract <CMZN0-3> has turned into a discount due to rising stocks in LME registered warehouses <MZNSTX-TOTAL>, which at 72,025 tonnes are up 45% since early last week.
That number is only a fraction of global demand estimated at around 14 million tonnes this year, but expectations are for more zinc to be delivered to exchange warehouses.
"The rebalancing of the zinc market may have been brought forward by the coronavirus outbreak, as prices come under pressure amid the recent stock surge," analysts at ING said.
"As stocks continue to climb, there would be a stronger mandate to short (sell) zinc and a broad bearish case is likely to unfold sooner than later."
Stocks in warehouses monitored by the Shanghai Futures Exchange <ZN-STX-SGH> are also up, near 100,000 tonnes from close to 28,000 tonnes at the end of December.
OTHER METALS: Aluminium was up 0.8% at $1,716.5, zinc rose 0.7% to $2,149, lead added 0.7% to $1,808, tin climbed 0.1% to $16,350 and nickel gained 1.8% to $13,110 a tonne. (Reporting by Pratima Desai; editing by Barbara Lewis, Kirsten Donovan)