* Eyes on Fed’s two-day meeting starting on Tuesday
* Aluminium bucks the trend of lower base metal prices
* Cash aluminium contract at a premium to 3-month future (Adds closing prices)
By Pratima Desai
LONDON, June 14 (Reuters) - Copper slipped on Tuesday as a stronger dollar and uncertainty created by a British vote on leaving the European Union hit sentiment, but losses were limited ahead of a Fed meeting on U.S. monetary policy.
Benchmark copper on the London Metal Exchange ended down 0.8 percent at $4,520.50 a tonne. A stronger U.S. currency makes dollar-denominated commodities more expensive for holders of other currencies, which subdues demand.
Uncertainty over the British referendum on June 23 grew as polls showed the “Leave” camp moving ahead in the polls. Nervous investors are selling equities and buying safe-haven bonds such as German Bunds.
“Markets have been unnerved by the latest polls on Brexit,” said Steve Hardcastle, head of client liaison at Sucden Financial. “The dollar is firmer, metals markets are watching the macro environment and the Fed.”
The U.S. central bank is expected to keep interest rates on hold at its June 14-15 meeting, but the market will scrutinise the statement and closely watch a briefing afterwards for clues to when rates might be raised.
Any hint of a delay beyond the July meeting will undermine the dollar and help industrial metals overall.
Three-month aluminium traded 0.6 percent higher at $1,610 a tonne. A tight LME market due to high cancelled warrants - metal earmarked for delivery and so not available to the market - at 44 percent was one reason for the gain. MALSTX-TOTAL
Funds reversing bets on lower aluminium prices was another. The scramble to cover short positions can be seen in the premium, or backwardation for the cash contract over the three-month future, which rose to $2 a tonne earlier on Tuesday. <0#CMAL:>
“The rise (in the premium) could be aggressive over the next few days,” a trader said. “It will come off, but the premium could well persist over the next two to three weeks.”
Overall, however, the aluminium market is oversupplied.
INTL FCStone analyst Edward Meir summed up the mood among participants at the Harbor Aluminium Conference:
“Analysts who spoke about the price outlook were considerably gloomier about prospects, largely on account of ongoing supply growth, flagging Chinese demand and high inventories.”
Zinc closed down 2.8 percent at $2,019 a tonne, lead lost 1.5 percent to $1,685, tin fell one percent to $16,975 and nickel was flat at $8,890.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin (Additional reporting by Naveen Thukral in SINGAPORE; Editing by Louise Heavens and Alexander Smith)