By Polina Devitt

Aluminium prices fell on Friday, with the market expecting an improvement in supplies from the key Middle East region as a U.S.-Iran interim peace agreement appeared to hold.

Benchmark three-month aluminium LME:AH1! on the London Metal Exchange was down 0.2% at $3,086 a metric ton in official open-outcry trading.

"Weaker demand, easing geopolitical risks and growing expectations of future supply have driven a sharp correction in prices over the past month," analysts at Citi said in a note.

Citi now expects aluminium to recover towards $3,300 a ton in September–December before bottoming out within a month.

The metal touched $3,040, its lowest since February 19, on Thursday but managed to stay above a key psychological level of $3,000 as a weaker dollar and easing concerns over an imminent U.S. interest rate hike following softer-than-expected U.S. jobs data provided support.

Easing concerns about future output in the Middle East, which produces 9% of global supply, Emirates Global Aluminium said on Thursday it was restoring production sooner than expected at one of its complexes, damaged by Iranian missile strikes in March.

Meanwhile, Japanese aluminium buyers agreed to pay global producers premiums of $395 per ton over the benchmark for July-September shipments, up 12-13% from the previous quarter, two sources told Reuters.

Higher premium in Japan indicates that some tightness in the global physical market persists, although analysts expect it to loosen in July-August before restocking resumes in September.

In other LME metals, copper LME:CA1! rose 0.1% to $13,342 a ton in official activity, supported by a weaker dollar and continuing outflows from stocks of the LME (MCUSTX-TOTAL) and the Shanghai Futures Exchange (CU-STX-SGH).

China's Yangshan copper premium (SMM-CUYP-CN), which reflects buying appetite in the world's largest consumer, finished the week at $74 a ton, the highest since mid-April.

LME tin MYX:FTIN1! jumped 2.1% to $52,005. Inventories of the metal in warehouses monitored by SHFE (SN-STX-SGH) fell 18% this week to an eight-month low of 6,222 tons.

Zinc COMEX:ZNC1! added 1.3% to $3,531, lead MCX:LEAD1! climbed 0.7% to $1,889, and nickel MCX:NICKEL1! gained 0.4% to $16,320.