METALS-Copper rises on month-end buying, Fed caution caps gains
* Hot weather lifts demand for copper tube used in air conditioners
* Dollar falls ahead of Fed policy meeting outcome
* Coming up: FOMC post-meeting statement at 1800 GMT
LONDON, July 31 (Reuters) - Copper rose on Wednesday as month-end buying helped the metal retrace losses in the previous session and on demand from top consumer China, but trade was cautious ahead of the outcome of a Federal Reserve policy meeting.
Global growth is pegged to the rate of recovery in the U.S. economy and investors are worried an early withdrawal of support from the U.S. central bank by tapering back in its bond purchases could threaten the outlook.
Three-month copper on the London Metal Exchange rose 1 percent to $6,812 a tonne by 0949 GMT, paring losses from the previous session when it fell by 2 percent. It closed at $6,735 on Tuesday.
"The moves down yesterday were FOMC related, and today there is a bounce against yesterday's fall off," Citi analyst David Wilson said, referring to the U.S. Federal Open Markets Committee.
The FOMC will releases its post-meeting statement at 2 p.m (1800 GMT) on Wednesday.
Caution about the outcome of the meeting pushed the dollar lower, helping to prop up copper. A weaker dollar makes commodities prices in the unit less expensive for holders of other currencies.
"Following the rapid rise in stock markets in July, we believe there is a risk of volatility and setbacks in the near term," Credit Suisse said in a research note.
"Among the risks are uncertainty about growth in China, Eurozone politics and Fed tapering, but we also note the risk that growth could begin to surprise on the upside."
Markets are also awaiting China's official manufacturing PMI to be released on Thursday.
Activity in China's vast manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signalling a protracted slowdown in the world's second-largest economy.
But signs from China's physical market pointed to steady buying, which traders said was driven by copper importers with the metal then sold on the local market to raise cash, given tight credit conditions.
Also, unusually hot temperatures in China have increased demand for copper tube that is used in air conditioners.
China's edict to more than 1,900 companies to shut excess production capacity by September is the latest effort to slim down bloated industries, but in the aluminium sector, the cuts are just a fraction of their surpluses.
LME benchmark aluminium was up 1.4 percent at $1,783 per tonne from $1776 at the close on Tuesday.
Tin was at $19,785 per tonne from $19,775, zinc at $1,837 from $1,836, lead at $2,040 from $2,030 and nickel was at $13,689 from $13,525.