METALS-London copper hits three-week low on U.S. deadlock
* Fed September minutes due at 1800 GMT
* Obama to meet House of Representatives Democrats at 2030 GMT
* Aluminium premiums fall due to LME "confusion" - Alcoa
* Yunnan Tin Co chairman charged with bribery by China
(Recasts, adds detail, comment, updates prices)
LONDON, Oct 9 (Reuters) - Copper dropped to its lowest in three weeks on Wednesday, as the United State's fiscal deadlock boosted the dollar and eroded appetite for stocks and other assets assoctiated with risk.
Benchmark three-month copper lost 2 percent to $7,097.75 by 1449 GMT. European shares hit a one-month low, while the dollar was up 0.4 percent versus a basket of major currency rivals.
President Barack Obama refused to give ground in a fiscal confrontation with Republicans on Tuesday, saying he would negotiate on budget issues only if they agree to re-open the federal government and raise the debt limit with no conditions..
"Markets are beginning to get increasingly concerned about the issues on Capitol Hill, and that the budget is yet to be agreed," said John Meyer, an analyst at Fairfax.
"Any form of crisis generally causes everything to pull back. Metals are often used as a short-term as well as longer-term store of value, and copper is increasingly used in this way, so (investors) tend to pull back in order to meet margin calls elsewhere."
Investors also awaited the release of the Federal Reserve's September minutes at 1800 GMT, which many will scan for reasons behind the central bank's decision not to start trimming its stimulus last month.
The dollar found some relief in the news that U.S. President Barack Obama has tapped Vice Chairwoman Janet Yellen as Ben Bernanke's successor in the top job, although the debt ceiling still casts a long shadow.
The dollar's gains contributed to the lack of support for copper, since a stronger greenback makes it more expensive for foreign buyers with other currencies to purchase the dollar-priced red metal.
Market uncertainty was unabated by Obama's hint on Tuesday that he might accept a short-term increase in the ceiling to avoid default.
"This is not something that the market will like, because it will increase uncertainty," said Gianclaudio Torlizzi, partner at T-Commodity.
Aluminium producer Alcoa Inc's chief financial officer said on Tuesday that global aluminium premiums have fallen due to "confusion" over the London Metal Exchange's proposal to overhaul its warehousing policy.
Alcoa and Russian producer Rusal have called on the LME to release more detailed data on long and short positions as well as inventories, and want the exchange to delay a decision on the long-running issue.
Aluminium lost 0.6 percent to $1,853.25 a tonne, lead fell 1.19 percent to $2,068, and zinc was softened 0.4 percent to $1,877. Nickel was down 0.7 percent to $13,809 a tonne.
Tin lost 0.8 percent to $23,360 a tonne, but remained near a seven-month high, supported by a Friday spike on worries over supplies from top exporter Indonesia.
The chairman of Yunnan Tin Co, the world's largest tin producer, was earlier arrested by Chinese authorities and charged with accepting bribes, in the latest example of the country's recent anti-corruption drive.
(Editing by William Hardy)