(Updates prices) July 23 (Reuters) - Copper advanced on Friday as improved risk sentiment and a stable dollar lifted metals prices that also gained support from extended monetary policy easing in the European Union. Three-month copper on the London Metal Exchange (LME) rose 0.6% to $9,495.50 a tonne by 0702 GMT, on track to finish the week in positive territory. The most-traded August copper contract on the Shanghai Futures Exchange rose 1.5% to close at 69,670 yuan a tonne for a third straight weekly gain. Copper, which is used in the power and construction industries among others, is widely viewed as a gauge of global economic health. “We saw a slight bounce in equity markets yesterday as upbeat earnings helped to overcome worries about growth. Together with a stable dollar, it means metals can trade a bit more on their own fundamentals,” said Marex Spectron commodities broker Anna Stablum. Sluggish inflation and the European Central Bank’s pledge to keep interest rates at record lows for longer also lent support. “(This) might add to bullish sentiment. Loose monetary policy is a big reason why we are up here in the first place,” Stablum said. FUNDAMENTALS * The premium for LME cash lead over the three-month contract CMPB0-3 hit $21 a tonne, its highest since June 29, indicating tightening nearby supply as LME inventories remain at one-year lows MPBSTX-TOTAL and floods in Germany hit European output. * ShFE nickel hit its highest since Feb. 26 at 143,940 yuan a tonne, tin climbed 4.3% to a record closing price of 235,400 yuan and lead touched an 11-month high at 16,315 yuan. * LME nickel rose to its highest in almost five months at $19,305 a tonne and tin hit a record $34,500 a tonne. * For the top stories in metals and other news, click or Reporting by Mai Nguyen in Hanoi Editing by David Goodman Our Standards: The Thomson Reuters Trust Principles.