(Adds analyst comment in paragraphs 4, 11, updates prices)

By Eric Onstad

LONDON, April 1 (Reuters) - Copper prices extended gains

on Wednesday to hit their highest in two weeks and aluminium

fell on hopes that the Iran war is close to ending.

Benchmark three-month copper on the London Metal Exchange

was up 0.6% at $12,408 a metric ton by 1000 GMT after

hitting $12,492.50, the highest since March 18.

That marked its fourth straight session of gains, but copper

was still well below a record high of $14,527.50 hit on January

29.

"The market wants to believe that we're getting closer to an

end to this escalation, even though we still have economic

clouds hanging over the markets, which are quite grey and could

worsen," said Ole Hansen, head of commodity strategy at Saxo

Bank in Copenhagen.

Copper joined stocks and other financial markets in rallying

after President Donald Trump said the end of the war on Iran

could be near.

The most-active copper contract on the Shanghai Futures

Exchange gained 1.5% to 97,030 yuan ($14,093.57) a ton,

following a rise to 97,250 yuan - the highest since March 19.

Metals also got a boost from data on Wednesday showing the

private manufacturing sector in top metals consumer China

expanded in March for a fourth straight month.

That came after data from an official survey on Tuesday

showed activity grew at the fastest pace in a year.

Higher premiums and falling Chinese inventories are showing

physical copper demand is improving.

Stocks monitored by SHFE declined for a second

consecutive week to 359,135 tons as of March 27.

"That indicates there was some pent-up demand and that the

lower prices that we reached earlier this month did trigger some

buying," Hansen added.

Metals gains were also buoyed by a weaker U.S. dollar

, making greenback-backed commodities more affordable for

investors using other currencies.

LME aluminium fell 0.5% to $3,451 a ton after hefty

gains in recent days due to supply fears after Iranian strikes

damaged key Gulf smelters over the weekend.

Among other metals, LME zinc added 0.2% to $3,231.50

a ton, lead gained 1% to $1,922, nickel rose

0.5% to $17,190 and tin climbed 1.1% to $47,280.

($1 = 6.8847 Chinese yuan renminbi)