MANILA, May 17 (Reuters) - London copper futures rose for a second session on Thursday, spurred by a retreat in the U.S. dollar from a five-month high against a basket of major currencies. Three-month copper on the London Metal Exchange was up 0.5 percent at $6,859 a tonne by 0404 GMT. ANZ analysts said in a note that the copper market appeared to be tightening, with the front-end of the curve moving into backwardation, when prices for future delivery are lower than those for immediate dispatch. The one-day spread on tomorrow's contracts, or tom-next spread, stood at $50 per tonne. "This appears to be creating a short squeeze, with many traders forced to buy back short positions," ANZ said. "If you look at the longer term, there's definitely a bull case for copper," Argonaut Securities analyst Helen Lau said, citing declining ore grades and rising cost, among other factors. "But in the short-term, we still need to grapple with slowing copper demand from China especially in the power sector." FUNDAMENTALS * DOLLAR: The greenback was trading at 93.187 against a group of major currencies, below Wednesday's peak of 93.632, its highest since Dec. 19, making dollar-denominated assets cheaper for holders of other currencies. * SHANGHAI COPPER: The most-traded July copper contract on the Shanghai Futures Exchange edged up 0.5 percent to 51,200 yuan ($8,052) a tonne. * CHINA DATA: Foreign direct investment into China in April fell 1.1 percent year-on-year to 59.24 billion yuan ($9.31 billion), China's Ministry of Commerce said. * CHALCO: Aluminum Corp of China Ltd, or Chalco, plans to export 30,000-50,000 tonnes of alumina in May, the company's president said. * U.S.-CHINA: The United States and China launch trade talks on Thursday in a bid to avert a damaging tariff war, with the White House's harshest China critic relegated to a supporting role, senior Trump administration officials said. * ASIAN SHARES: Asian equities held steady, while the euro struggled near five-month lows set a day earlier following a report that Italian populist parties trying to form a coalition could ask the European Central Bank to forgive 250 billion euros of debt. * HONG KONG EXCHANGE: The head of Hong Kong Exchanges and Clearing said it would take time for the group to develop its metals business on the Chinese mainland, including plans to develop its commodity business in Qianhai in southern China and start warehousing through its London Metal Exchange operations. * LITHIUM: Australia's Kidman Resources said it would supply lithium for Tesla Inc's electric car batteries, the latest in a string of deals by carmakers securing supplies of the mineral as demand surges for clean cars. * OTHER METALS: LME aluminium rose 0.7 percent to $2,332 a tonne and nickel gained 0.5 percent to $14,545. In Shanghai, aluminium climbed 1.1 percent to 14,905 yuan per tonne, while nickel added 0.6 percent to 108,060 yuan.