LONDON, Feb 22 (Reuters) - Copper prices climbed to their highest since July on Friday as inventories tumbled and investors bet on a U.S.-China trade deal.

Optimism over a trade deal has been rising as top U.S. and Chinese trade negotiators haggle over the details of a set of agreements aimed at ending their trade war.

"Copper is getting a lot of momentum from the trade talks. If we get a deal, there wouldn't be much obstacle for copper to return to the low $7,000s," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.

Benchmark copper on the London Metal Exchange has broken the key level of $6,400 a tonne, which marks the upper boundary of a range that has held for the past six months, he added.

"If this confirmed today on the weekly chart with a close above $6,400, it would mark the start of new bull cycle for copper."

LME copper gained 1.6 percent in closing open outcry trading to $6,478 a tonne, its highest since July 4.

The metal, widely used in construction and manufacturing, posted a 4.6 percent gain this week, its biggest weekly jump since the week ended Sept. 21 last year.

* COPPER STOCKS: On-warrant LME copper inventories <MCUSTX-TOTAL>, those not earmarked for delivery, slumped by nearly half to 39,800 tonnes in one day, the lowest since August 2005, LME data showed on Friday.

* ALUMINIUM: LME aluminium gained 0.4 percent to finish at a two-week high of $1,913 a tonne.

Recent gains have been driven by speculators covering short positions, Alastair Munro at broker Marex Spectron said in a note. The LME net speculative short position accounted for 17.6 percent of open interest, according the Marex estimates.

* ZINC: Falling LME zinc inventories, hovering at the lowest levels in more than a decade, may spur prices higher, metals strategist Michael Widmer at Bank of American Merrill Lynch said in a note.

"With inventories so low, it is easier for market participants to take a dominant position, which in turn could lead to prices squeezing violently higher."

* NICKEL: LME nickel climbed 1.1 percent to end at a two-week high of $12,990 a tonne after on-warrant LME inventories <MNISTX-TOTAL> fell to 128,580 tonnes, the lowest since February 2013.

* PRICES: Zinc gained 1.5 percent to close at $2,724 a tonne, lead added 0.4 percent to $2,075 and tin rose 0.3 percent to $21,495.