June 15, 2017 / 10:02 AM / 3 years ago

METALS-Copper falls after U.S. interest rate increase

* Fed strikes hawkish note after lifting U.S. rates

* Dollar snaps three days of losses after Fed move

* LME/ShFE arb: tmsnrt.rs/2oQ5nm2 (Updates with closing prices)

By Jan Harvey

LONDON, June 15 (Reuters) - Copper fell for a fourth day on Thursday after the Federal Reserve lifted U.S. interest rates and took a more hawkish than expected stance on future policy, boosting the dollar and weighing on assets priced in the U.S. currency.

The dollar strengthened as expectations for another U.S. rate increase this year were kept alive by a policy statement that indicated huge emergency funds pumped into the economy since 2009 could be trimmed.

“The recovery in copper prices from the early May lows to the recent highs was helped by the weakening dollar,” said Julius Baer analyst Carsten Menke. “We see the dollar strengthening in the second half of this year. That should cause some headwinds for the metals markets.”

Below-forecast U.S. inflation and retail sales data on Wednesday, coming hot on the heels of reports showing Chinese growth could lose momentum, had already reinforced concerns about the outlook for raw materials demand.

Overall, the outlook for Chinese growth will be the leading driver for copper prices, Menke said.

“The data we’ve seen this week in terms of fixed-asset investment, infrastructure and also property reflects the market’s belief that we’re about to see a slowdown from that side,” he said. “That is something the copper market is (reflecting) currently.”

* LME COPPER: London Metal Exchange copper did not trade at the close but was last bid down 0.7 percent at $5,661 a tonne.

* FEDERAL RESERVE: The Fed raised interest rates for the second time in three months and said it would start cutting its holdings of bonds and other securities this year.

* COPPER STOCKS: Copper inventories in London Metal Exchange warehouses MCU-STOCKS fell by another 4,125 tonnes, exchange data showed, taking them to their lowest in more than six weeks.

* STEEL PRICES: Steel raw material zinc rose after capacity cuts in China drove up steel prices by 3 percent. LME zinc ended the day 0.4 percent up at $2,505.

* ZINC DEFICIT: The global zinc market deepened its deficit to 92,400 tonnes in April from a revised 72,700 tonnes in March, data from the International Lead and Zinc Study Group (ILZSG) showed.

* ZINC STOCKS: Zinc stocks in LME warehouses MZN-STOCKS fell another 1,800 tonnes to 316,175 tonnes, their lowest since early 2009, exchange data showed.

* RUSAL: Russian aluminium giant Rusal said it plans to boost its production by 19 percent from 2016 levels to 4.4 million tonnes by 2021 amid rising global demand. Aluminium finished 0.6 percent down at $1,872.

* OTHER METALS: LME lead closed 0.6 percent up at $2,092 a tonne, while tin gained 1.4 percent to $19,500 and Nickel lost 1 percent to $8,850.

Additional reporting by Melanie Burton in Melbourne; Editing by Keith Weir and David Goodman

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