June 7 (Reuters) - Copper prices slipped on Tuesday, weighed down by a stronger dollar, although demand revival hopes as top consumer China relaxed COVID-19 curbs, and declining inventories limited losses.

Three-month copper on the London Metal Exchange was down 0.6% at $9,682.50 a tonne, as of 0344 GMT. The most-traded July copper contract in Shanghai was down 0.1% at 72,690 yuan ($10,909.50) a tonne by the midday break.

The dollar continued its overnight rally into Asian trading hours, hitting fresh two-decade highs versus the yen, as worries about persistent inflation pushed up U.S. bond yields.

A stronger dollar makes greenback-denominated metals more expensive for buyers using other currencies.

Copper, often used as a gauge of global economic health, jumped 4.4% on Monday to hit its highest since April 27 at $9,916.19 on strong China demand prospects.

"Sentiment is boosted by signs that China is easing pandemic restrictions. Nevertheless, traders are still waiting for more concrete signs that easing restrictions will feed through into construction activity," commodity strategists at ANZ said in a note.

CHINA: Beijing and the commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns. Traffic bans were lifted and restaurants were opened for dine-in service on Monday in most parts of Beijing.

INVENTORIES: At 140,975 tonnes, copper stocks in LME-registered warehouses have dropped more than 20% since the middle of May.

NICKEL: U.S.-based Jane Street Global Trading has sued the London Metal Exchange for $15.3 million following the cancellation of nickel trades on the platform owned by Hong Kong Exchanges and Clearing in March.

* Nickel volumes on the LME plummeted in April because commodity funds and other participants abandoned the metal after a meltdown in March left the market in limbo for more than a week.

PRICES: LME aluminium was up 0.2% at $2,787.50 a tonne, zinc eased 0.3% to $3,861, lead was up 0.1% at $2,217, and tin lost 0.3% to $35,500.

Shanghai aluminium fell 0.4%, zinc was down 1.5%, nickel climbed 0.7%, lead rose 1.6%, and tin dipped 1%. ($1 = 6.6630 Chinese yuan) (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)