NEW DELHI, March 24 (Reuters) - Copper prices hit a three-week high for a second day on Friday, as lingering unease about a possible crisis in the banking sector kept the U.S. dollar near seven-week lows.

Three-month copper on the London Metal Exchange was up 0.29% at $9,057 a tonne by 0746 GMT, after earlier touching its highest since Mar. 2 at $9,095 a tonne.

A weaker dollar makes dollar-priced commodities cheaper for buyers holding other currencies.

The most traded May copper contract on the Shanghai Futures Exchange was up 1.84% to 69,760 yuan a tonne.

The dollar was pinned near seven-week lows on Friday as nervousness over banks kept investors skittish, and traders assessed the Federal Reserve's chances of a pause to interest rate hikes.

The Fed on Wednesday raised rates by a widely expected 25 basis points (bps), but took a cautious stance on outlook because of turmoil in the banking sector.

U.S. Treasury Secretary Janet Yellen on Thursday reiterated that she was prepared to take further action to ensure that Americans' bank deposits stayed safe, in a bid to calm investor nerves.

However, some analysts said the metal could outperform soon.

"While industrial metals remain sensitive to macroeconomic developments, green shoots are emerging in Chinese demand," said Soni Kumari, commodity strategist at ANZ Research.

"If the ongoing banking crisis is not destabilising, we believe industrial metals prices are set to outperform."

LME zinc was up 0.69% to $2,927, tin was up 2.06% to $24,850, lead weakened 0.26% to $2,120.50, while aluminium was up 0.84% at $2,345.50 a tonne.

SHFE aluminium was up 1.21% to 18,470 yuan a tonne, nickel was 3.74% higher at 181,410 yuan, tin was up 5.86% at 199,600 yuan, while zinc was up 2.09% at 22,680 yuan, lead was edged up 0.03% 15,390 yuan.

DATA/EVENTS (GMT) 0815 France S&P Global Mfg, Serv, Comp Flash PMIs March 0830 Germany S&P Global Mfg, Serv, Comp Flash PMIs March 0900 EU S&P Global Mfg, Serv, Comp Flash PMIs March 0930 UK Flash Comp, Mfg, Serv PMIs March 1230 US Durable Goods Feb 1345 US S&P Global Mfg, Serv, Comp Flash PMIs March

For the top stories in metals and other news, click or (Reporting by Neha Arora; Editing by Sonia Cheema and Nivedita Bhattacharjee)