Copper leads base metals lower as Fed hawkish signal pushes dollar higher

Jan 27 (Reuters) – Benchmark base metal prices in London were mostly lower on Thursday after the U.S. Federal Reserve signaled an interest rate hike as early as March, pushing the dollar higher, with copper falling after two days of earnings.

A rise in U.S. interest rates could reduce financial market liquidity and dampen prospects for an economic recovery, while a stronger dollar makes greenback-priced metals more expensive for holders of other currencies .

Three-month copper on the London Metal Exchange was down 1.7% at $9,748 a tonne, at 0718 GMT.

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At a press conference Wednesday following a meeting of the Federal Open Market Committee, Fed Chief Jerome Powell said that “the committee is of the view that the federal funds rate should be increased during the March meeting assuming the conditions are appropriate to do so”. Read more

“Risk assets fell sharply following the FOMC meeting overnight, with Fed Chairman Powell appearing hawkish, even as he tried to be measured,” said Tapas Strickland, an economist at the National Australia Bank.

The most-traded copper contract in March on the Shanghai Futures Exchange ended the day down 0.5% at 69,780 yuan ($10,989.67) a tonne, erasing early gains.

FUNDAMENTALS

* The leader of an Andean community said on Wednesday that residents would block a controversial route used by MMG’s Las Bambas mine (1208.HK) to transport its metal from Thursday, a route that is a flashpoint of the local protests.

* The US Department of the Interior on Wednesday canceled two mining leases for Antofagasta Plc’s (ANTO.L) proposed Twin Metals copper and nickel mine in Minnesota, killing the project and delivering a major victory for environmentalists. Read more

* The United States has charted a diplomatic course to respond to hardline Russian demands in Eastern Europe, as Moscow held security talks with Western countries and stepped up its military buildup near Ukraine with new drills . Read more

* Shanghai aluminum rose 0.4% to 21,540 yuan a ton, zinc climbed 0.1% to 24,820 yuan, nickel fell 0.6% to 163,880 yuan, lead fell 0.4% to 15,395 yuan, while tin climbed 2.3% to 326,760 yuan.

* LME aluminum fell 0.4% to $3,083 a tonne, zinc 0.4% to $3,595, nickel 1.4% to $22,375, lead 0.2% at $2,316.75, while tin climbed 0.9% to $42,570.

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Reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips

Our standards: The Thomson Reuters Trust Principles.

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