METALS-Copper drops to two-week lows on Fed tapering caution
* US non-farm jobs data eyed this week for clues on economy
* Tin falls ahead of Indonesian unprocessed ore export ban
* European Central Bank rate decision at 1245 GMT
LONDON, Jan 9 (Reuters) - Copper prices fell to two-week lows on Thursday after upbeat jobs data increased expectations that the U.S. Federal Reserve could scale back its bond-buying stimulus programme more aggressively than anticipated.
Three-month copper on the London Metal Exchange dropped to $7,257.25 a tonne at 1045 GMT, down 1.2 percent from Wednesday's close of $7,344. It earlier fell to its lowest level since Dec. 24 at $7,246.75.
A report from a major payrolls processor on Wednesday showed U.S. private employers hired staff at the fastest pace in 13 months in December, boosting expectations that Friday's crucial U.S. non-farm jobs figures could also top forecasts later this week.
"If the U.S non-farm payrolls data does beat expectations, then there is a strong possibility that the new regime in the Federal Reserve bank could take more aggressive steps towards tapering, which could put more pressure on copper," said Naeem Aslam, chief market analyst at Ava Trade.
Minutes from the Federal Reserve's Dec. 17-18 meeting showed the central bank wanted to err on the side of caution.
Market participants, however, have begun to price in tighter policy sooner rather than later, with the tapering process expected to be completed by the end of this year.
Adding to the weak copper market were signs of limited restocking demand from China as its economy cools.
China is the world's largest consumer of copper, accounting for as much as 40 percent of global refined demand.
"The dollar will continue to strengthen because of U.S tapering, and China's economic growth is slowing down," said Helen Lau, a senior commodities analyst with UOB Kay Hian in Hong Kong.
"I'm a bear on copper prices. I think $7,000 is a more sustainable level," she said.
The dollar traded close to seven-week highs against a basket of major currencies following the U.S. private-sector jobs report. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.
Investors are expected to keep a close eye on a European Central Bank rate decision at 1245 GMT and news conference from 1330 GMT for further indications of policy direction in Europe.
In other metals, tin fell more than 1 percent to $21,700 a tonne, ahead of Indonesia's ban on unprocessed mineral ore exports from Jan. 12.
"Tin is turning out to be the biggest loser - no doubt partly because of the ongoing uncertainty over the ore export ban in Indonesia," Commerzbank analysts said in a note.
Indonesia's mining ministry sought to ease a controversial mineral export ban before its Sunday deadline but still looked set to prohibit more than $2 billion worth of annual nickel ore and bauxite shipments.
Under the proposed regulations, miners such as U.S. giants Freeport-McMoRan Copper & Gold and Newmont Mining Corp would still be allowed to export copper, manganese, lead, zinc and iron ore concentrate until 2017.
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