METALS-Copper extends gains after Fed comments on policy, jobs

* London copper rises 1.4 pct; ShFE 2.3 pct

* Coming Up: U.S. PPI for February (1230 GMT)
(Updates prices)

By Nick Trevethan

SINGAPORE, March 17 (Reuters) - Shanghai copper rose 2.3
percent on Wednesday, while London futures climbed to their
highest in a week, extending a rally fuelled by a softer dollar
and gains on Wall Street.

The dollar hovered near one-month lows against a basket of
currencies as investors cut long positions after the U.S.
Federal Reserve retained its dovish bias by pledging to keep
interest rates low. [ID:nN16251615]

But the Fed also said the U.S. labour market was
"stabilising," a view that was more upbeat than at the last
meeting in late January, when the policy-setting committee said
only that deterioration in the labour market was "abating".

"The dollar, the easing worries about Greece and the
willingness of other EU members to help if needed are
supportive. Greece has been the elephant in the room for a
while... but markets are more confident that an imminent
default is less likely," said Ben Westmore, commodities
economist at National Australia Bank.

"We are also seeing some of the positioning on fears of
aggressive tightening by China being unwound."

Three-month copper on the London Metal Exchange CMCU3
rose $105 to $7,505 a tonne by 0700 GMT, building on the 1.2
percent rise in the previous session. Prices touched $7,535
after Shangahi closed, their highest since March 10.

Benchmark third-month Shanghai copper SCFc3 rose 1,340
yuan to a one-week high 60,140 yuan

"The direction hasn't been that clear for a while now. The
range is $7,500-$7,550 on the upside... while $7,200 is the
initial downside level. We are choppy in that range," a trader
in Hong Kong said.

"I can't see us pushing on unless more money comes in.
Chilean earthquakes are pulling us up and dollar strength is
capping the upside. Demand is likely to sustain prices around
the $6,900 to $7,000 level and people look willing to buy there
with a longer term view."

An 8.8 magnitude earthquake in Chile at the end of last
month sent copper prices jumping almost 6 percent in a day,
while strength in the dollar on worries about the ability of a
number of euro zone countries to service their debts has muted
the appetite for commodities.

LME copper stocks continued their run of declines. Stocks
have come off more than 24,000 tonnes since March 1 to 528,050
tonnes, their lowest since the middle of January.

In industry news, Kazakhstan's industry minister said its
annual copper cathode output is expected to grow by 95,000
tonnes, or nearly 24 percent, within five years from 400,000
tonnes now.

He told a mining conference Kazakh copper major Kazakhmys
(KAZ.L) would account for 25,000 tonnes of the total increase
while Glencore-controlled [GLEN.UL] Kazzinc would raise
production by 70,000 tonnes. [ID:nLDE62G039]

Other metals also rose. Nickel CMNI3 added 1.7 percent to
$22,250 and aluminium and zinc were also firm. Since early
February, nickel prices have rallied 30 percent.

"Nickel looks like it might be benefiting from supply side
worries. The strike in Canada and risks to the Goro timetable,
which keeps slipping," NAB's Westmore said.

Workers at Brazilian miner Vale's (VALE5.SA) Sudbury
operations have been on strike since the middle of last year,
while the Goro project in New Caledonia has seen a series of
delays. [ID:nLDE6211R3]
Base metals prices at 0700 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 7505.00 105.00 +1.42 7375.00
1.76
SHFE Cu* 60140.00 1340.00 +2.28 59900.00
0.40
LME Alum 2274.00 16.00 +0.71 2230.00
1.97
SHFE Alum* 16820.00 125.00 +0.75 17160.00
-1.98
COMEX Cu** 335.70 5.00 +1.51 332.75
0.89
LME Zinc 2338.25 31.25 +1.35 2560.00
-8.66
SHFE Zinc 18995.00 340.00 +1.82 21195.00
-10.38
LME Nickel 22250.00 375.00 +1.71 18525.00
20.11
LME Lead 2262.00 42.00 +1.89 2432.00
-6.99
LME Tin 17576.00 26.00 +0.15 16950.00
3.69
LME/Shanghai arb^ -208
Dollar/yuan 6.8253 \ 6.8264
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
(Editing by Michael Urquhart, Himani Sarkar)