(Recasts on copper decline, updates prices and changes dateline

to London)

By Tom Daly

LONDON, July 23 (Reuters) - Copper gave up early gains to

trade lower on Thursday, tracking equity markets downwards after

oil prices hit their highest in more than seven weeks on

escalating hostilities in the Middle East.

Benchmark three-month copper on the London Metal

Exchange was down 0.6% at $13,725.50 a metric ton at 0930 GMT,

having climbed as much as 0.5% earlier in the session on

concerns over dwindling inventories.

Oil prices rose for a fifth day, jumping as much as 5%

to $98.75 a barrel after Yemen's Iran-aligned Houthis said they

attacked two oil tankers as part of a blockade on Saudi Arabia.

Higher energy prices are weighing on the outlook for the

global economy, for which copper is considered a bellwether, and

increasing the likelihood of increases to interest rates.

Thin inventories were supporting copper prices, however,

with available LME stocks of 107,850 tons the

lowest since January. The cash LME copper contract was trading

at a $4.70 premium over the three-month forward on

Wednesday, indicating tight near-term supply.

"It's pretty clear for us that there's no appetite to invest

in the downside on copper," Pierre-Alix Favillier, head of base

metal options at Sucden Financial, said on a webinar.

"If you look at the investment appetite and the AI story

behind, it's only going higher."

In top metals consumer China, the Yangshan copper premium

- a gauge of demand for imports - was assessed at

$115 a ton on Wednesday, the highest daily assessment since

November 2022.

Prices have also been supported by strong copper shipments

into the United States ahead of a potential tariff on refined

copper imports. Traders are awaiting details of the proposed

tariff.

Elsewhere, aluminium fell 0.3% to $3,183 a ton,

zinc rose 0.6% to $3,614, nickel gained 1% to

$17,405, notching a one-month high, while tin added 0.6%

to $54,020 and lead edged up by 0.2% to $1,899.50.