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METALS-Copper ticks higher on hopes of later Fed tapering

Harpreet Bhal and Eric Onstad
Friday, 13 Dec 2013 | 10:38 AM ET

* U.S. PPI for November falls for third month

* Copper on track to rise 1.6 percent this week

* Indonesian export ban to also hit aluminium

LONDON, Dec 13 (Reuters) - Copper edged higher on Friday, its sixth straight session of gains, as investors hoped weak U.S. producer prices would lead U.S. authorities to only start tapering its monetary stimulus next year, not this month as some have feared.

Three-month copper on the London Metal Exchange rose 0.24 percent to $7,243 a tonne by 1517 GMT.

After hitting one-month highs this week, the metal used in power and construction is trading 1.6 percent higher for the week but is down nearly 9 percent this year.

Copper recovered from modest losses after data showed U.S. producer prices fell for a third straight month, pointing to scant inflation pressure that could give the Federal Reserve pause as it weighs the future of its monthly bond purchases.

The focus next week is due to be on a Fed policy meeting on Dec. 17-18 for any indications of when the central bank might begin reining in its massive monetary stimulus programme.

The stimulus programme has released more money into the economy and has been used to buy assets including commodities.

"It is all about the taper and its timing, of course," said Anita Paluch, a strategist at Varengold Bank.

Weighing on metals prices, however was a slightly firmer dollar against a basket of currencies, following upbeat U.S. retail sales data on Thursday and the smooth passage through the U.S. House of Representatives of a budget deal to avoid a government shutdown.

A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.

Tightening copper supplies supported the market. LME cash copper surged on Thursday to a $14.50 premium against the three-month contract , the highest since July 2012, before easing to $8 on Friday.

"We're definitely looking at this quarter and the first quarter of next year to be tighter than what the annual surplus would suggest," said Barclays analyst Sijin Cheng in Singapore.

Metals continued to be supported by the planned ban on unprocessed ore exports from Indonesia, including aluminium , which rose 0.7 percent to $1,803 a tonne.

"The aluminium market could be affected substantially in 2014 if Indonesia goes ahead with its proposed comprehensive ban on exports of unprocessed raw materials, given China's continuing reliance upon imports of bauxite from Indonesia," Natixis analyst Nic Brown said in a note.

"China's alumina producers are already struggling to keep pace with the rise in aluminium smelting capacity, which will support alumina prices at the expense of aluminium producers' profitability."

Tin, also due to be hit by the Indonesia ban, was the top performer, rising 1.2 percent to $22,775 a tonne.

Zinc added 0.2 percent to $1,970.50, lead climbed 0.8 percent to $2,144 and nickel rose 0.2 percent to $14,030.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin