METALS-Copper falls on dollar, hawkish U.S. Fed minutes

* Dollar rises on hawkish tone in Fed minutes

* Physical buyers still absent from metals market - analyst

* Coming up: U.S. nonfarm payrolls, Dec; 1330 GMT

LONDON, Jan 4 (Reuters) - Copper fell on Friday as the dollar rose strongly after the U.S. Federal Reserve flagged concerns about the risks of its stimulus programme, and a rally over a deal in Washington to avert a budget crisis ran out of steam. In a surprise to Wall Street, minutes from the Fed's December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank's $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.

The Fed's quantitative easing has been a big factor underpinning risk appetite, and the hawkish tone drove the dollar higher. The dollar is often favoured at times of market uncertainty, and strategists have said it could make further gains in the coming weeks. Three-month copper on the London Metal Exchange fell 0.6 percent to $8,116 per tonne by 1015 GMT from a close of $8,154 on Thursday. "The dollar has strengthened and the euro rally has run out of steam. Asian investors and banks have been dumping the euro so I think its run into that kind of headwind," Citi metals analyst David Wilson said. A stronger dollar makes dollar-based assets more expensive for non-dollar investors and its rise also hit precious metals and oil. Copper is still heading for a 2.5 percent gain this week, after surging to its highest in more than two months on Wednesday in a broad financial markets rally after the U.S. Congress struck a deal to avert a fiscal disaster. "I guess there was some exuberance, because the U.S. did not fall off the cliff. But there is not much consumer business at the moment and none of the physical players are rushing back into the market and booking metal," Wilson said. "We need to settle and get more positive macro data under our belts to see in which direction we're heading." Later on Friday, the U.S. nonfarm payrolls report is expected to show the American economy added 150,000 jobs in December, according to a Reuters survey of economists, up from November's 146,000. U.S. unemployment has come down steadily after hitting a peak of 10 percent in late 2009, but remains high at 7.7 percent.

CHINA Next week, China is expected to release data including inflation, trade and new loans, which will offer insight into the health of an economy that is a top consumer of many raw materials including copper. "We won't see the high-speed growth in China as in the past," said a Shanghai-based trader. "We are still in the post-crisis mode and the global recovery is slow and fragile, which doesn't support a major rally in copper." RBC said predicting short-term direction for base metals is now difficult, but stuck to its expectation of higher prices in the first quarter. "We would think that the news flow out of China will continue to be positive and the complex will rally once again as we progress through the month," the bank said in a research note. In other metals, three-month tin was $24,075 per tonne from $23,980 at the close on Thursday and zinc was $2,073 from $2,088. Lead was $2,361 f r om $2,399, a l uminium was at $2,103 from $2,116 and nickel at $17,485 from $17,500.

Metal Prices at 1016 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T

Metal Last Change Pct Move End 2012 Ytd Pct

move

COMEX Cu 369.00 -2.05 -0.55 365.25 1.03 LME Alum 2102.50 -13.50 -0.64 2073.00 1.42 LME Cu 8116.00 -38.00 -0.47 7931.00 2.33 LME Lead 2361.00 26.00 +1.11 2330.00 1.33 LME Nickel 17456.00 -44.00 -0.25 17060.00 2.32 LME Tin 24000.00 20.00 +0.08 23400.00 2.56 LME Zinc 2070.50 -17.50 -0.84 2080.00 -0.46 SHFE Alu 15315.00 -50.00 -0.33 15435.00 -0.78 SHFE Cu* 58210.00 440.00 +0.76 57690.00 0.90 SHFE Zin 15540.00 20.00 +0.13 15625.00 -0.54 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN

SHFE ZN began trading on 26/3/07