LONDON, Dec 15 (Reuters) - Copper prices extended their gains on Friday on improving Chinese industrial data and hopes for lower U.S. interest rates.

Three-month copper on the London Metal Exchange edged up 0.5% at $8,590 per metric ton by 1143 GMT. The red metal posted its biggest daily gain in a year on Thursday.

The copper price broke the key psychological barrier of $8,500 a ton, heading back towards the high hit at the beginning of December, Thu Lan Nguyen, head of Commerzbank's commodity research, said in a note.

"The International Copper Study Group will be publishing its latest figures for supply and demand next week. If the data confirm a tightening on the market that is suggested for example by China’s high copper imports, the price could chalk up further gains," said Nguyen.

China, the world's top consumer of copper, registered accelerating growth in its industrial output for November, data showed on Friday. The country had been importing more copper in the second half of this year as prices softened.

Copper is widely used in construction and the power sector to produce cables, motors and wind turbines.

Also supporting base metals markets are prospects of lower borrowing costs for industrial businesses following the Fed announcement.

The dollar index was slightly firmer, but set for its steepest weekly drop in five months against major currencies, which has made greenback-priced metals cheaper to holders of other currencies.

Aluminium prices are on track to post the biggest weekly gain in five months. LME aluminium was last traded at $2,258 a metric ton, up 5.9% from a week ago.

LME zinc rose 1.5% to $2,530 a metric ton, lead increased 1.3% to $2,095, nickel gained 1.1% to $17,160, and tin edged up 0.1% at $25,390. Lead was up 1.3% at $2,095.

(Reporting by Julian Luk in London; additional reporting by Mai Nguyen in Hanoi; Editing by David Evans, Elaine Hardcastle)