Copper eases from 5-mth top ahead of Fed meeting

NEW YORK/LONDON, Sept 20 （Reuters） - Copper prices backed away from a five-month peak on Monday as cautious investors cashed in on a recent rally and braced for a U.S. Federal

Reserve policy meeting that may lead to further plans to stimulate the world's largest economy."That's the question … are they going to talk about the need to stimulate and support the economy?" asked Frank Lesh broker and futures analyst with Future Path Trading in Chicago."At this point I don't think we are going to hear about the need. We may hear the Fed say they are ready, if necessary, but I don't think that they want to imply that things are getting worse." Copper for December delivery HGZ0 on the COMEX metals division of the New York Mercantile Exchange fell 1.75 cents to end at $3.5045 per lb, after dealing from $3.4860 to $3.5555, which marked the highest level for the fourth-position futures contract since April 26. On the London Metal Exchange, benchmark copper for three-month delivery CMCU3 peaked at $7,812 per tonne, also a high dating back to April 26, before ending down $5 at $7,715. Losses in the complex were limited due to a broad slide in the U.S. dollar and speculation the Federal Reserve may suggest the need to inject more stimulus into the struggling U.S.economy when it announces its latest policy decision on Tuesday. "Dollar weakness translates into base metals strength," noted trader Randy North of RBC Capital Markets. "Whatever action the Fed takes and resulting impact on the dollar, if the dollar continues to weaken, you'll see support in the copper price." A growing trend of falling LME inventories also has helped overall sentiment in recent months. The latest LME data showed on Friday that copper stocks slipped 1,700 tonnes to 382,500 tonnes, having fallen from 6-1/2-year highs at 555,075 tonnes in mid-February. Aluminum CMAL3 touched $2,223, its highest level since Aug. 6, and finished at $2,195, up from a last bid at $2,180 on Friday. LME stocks for the metal, used in transport and packaging, shed 5,050 tonnes to 4.38 million tonnes. A large portion of those aluminum stocks are tied up in finance deals.

ETF TALK HEATS UP

A recent rise in canceled warrants -- material earmarked for delivery -- also has helped boost sentiment. The latest LME data showed that aluminum canceled warrants were at 251,825 tonnes, up from 150,875 tonnes the day before, amounting to 5.74 percent of the total 4.39 million tonnes in LME sheds. The global aluminum market stands at 36 million tonnes. "There is speculation, and it is just speculation, that this is further evidence of the pre-imminent launch of an ETF,"David Thurtell, analyst at Citi, said about aluminum. Market talk of a possible physical copper ETF was also evident. UK-based ETF Securities declined on Monday to comment on talk that it was planning to soon launch a physically backed copper exchange traded product （ETP）。 [ID:nLDE68J0PH] "It may just be chat ahead of LME Week next month, or maybe just investor idle speculation following on from even stronger rumors that two investment banks （with backing from Glencore and RUSAL） are looking into a physical aluminum ETF for the end of 2010," Bernstein Research said in a note. Trading was expected to slow this week, however, due to a market holiday in Japan on Monday and Chinese holidays from Wednesday to Friday. China, the world's top metals consumer, will also be shut for a week from Oct 1. HOLIDAY Among other metals, nickel CMNI3 closed at $23,050, down from a final bid at $23,200 on Friday. Lead CMPB3 eased $7.50 to end at $2,195, while zinc CMZN3 rose $29 to close at $2,180 a tonne. Tin CMSN3 fell $100 to $23,50 a tonne. On Friday, tin hit a two-year high at $23,800.

Metal Prices at 2:37 p.m. EDT （1837 GMT）

GMT COMEX copper in cents/lb, LME prices in $/T and SHFE

prices in yuan/T

 Metal           Last    Change  Pct Move   End 2009   YTD Pct                                                  

 COMEX Cu       350.60    -1.60   -0.45      334.65      4.77

 LME Alum      2200.00    46.00   +2.14     2230.00     -1.35

 LME Cu        7705.00   -15.00   -0.19     7375.00      4.47

 LME Lead      2170.00   -32.50   -1.48     2432.00    -10.77

 LME Nickel   23035.00  -215.00   -0.92    18525.00     24.35

 LME Tin      23200.00  -400.00   -1.69    16950.00     36.87

 LME Zinc      2170.00    19.00   +0.88     2560.00    -15.23

 SHFE Alu     15760.00    70.00   +0.45    17160.00     -8.16

 SHFE Cu*     60250.00   150.00   +0.25    59900.00      0.58

 SHFE Zin     18105.00   150.00   +0.84    21195.00    -14.58

** Benchmark month for COMEX copper

* 3rd contract month for SHFE AL, CU and ZN