(Adds analyst comment and dateline, updates prices)

By Eric Onstad

LONDON, May 12 (Reuters) - Copper prices edged higher on

Tuesday as funds bet on further gains due to supply issues and

bullish technical signals, largely ignoring worries about the

lack of progress in ending the Iran war.

Benchmark three-month copper on the London Metal

Exchange was up 0.4% at $13,992.50 a metric ton by 0940 GMT, its

highest in more than three months, after posting a record close

on Monday.

Hopes for a peace deal on Iran faded on Tuesday after U.S.

President Donald Trump said the ceasefire with Iran was "on life

support".

"Metals paused overnight and drifted amid that macro

weight," said Alastair Munro, senior base metals strategist at

broker Marex.

"But since the London open a systematic bid has emerged on

likes of copper, aluminium and zinc," he added, referring to

funds that use computer-driven models.

Bullishness over an AI boom that is expected to require

large amounts of copper for data centres helped offset any

worries about weaker demand from an extended Middle East

conflict, Munro added.

LME copper broke above key technical levels in recent

sessions as it moved closer to its intra-day record high of

$14,527.50 hit on January 29.

The most-active copper contract on the Shanghai

Futures Exchange, closed 2.1% higher at 105,510 yuan

($15,528.28) a ton.

Also supporting copper were power issues in Peru, the

world's third-largest copper producer, which authorised

state-run Petroperu to seek $2 billion in

state-backed loans to sustain operations.

Expectations that China's refined copper imports could rise

in the second quarter also helped prices.

Among other metals, aluminium lost 0.4% to $3,566 a

ton, zinc gained 0.8% to $3,507.50, lead added

0.2% to $1,991.50, nickel shed 1.4% to $18,975 and tin

slipped 0.3% to $55,525.

($1 = 6.7947 Chinese yuan renminbi)