* China's central bank drains $7.9 bln from the market
* Euro hits seven week high vs dollar
* Alcoa to shut Port Henry aluminium smelter in Australia
(Updates prices, adds comment)
LONDON, Feb 18 (Reuters) - Copper was steady on Tuesday as support from a weak dollar offset concerns about short-term demand in China after its central bank moved to tighten the money supply.
The People's Bank of China (PBOC) issued cash-draining forward bond repurchase agreements on Tuesday, sucking 48 billion yuan ($7.9 billion) out of the system, pushing up the cost of money after unexpectedly strong credit growth in January.
Three-month copper on the London Metal Exchange was at $7,179 a tonne at 1506 GMT, from a last bid of $7,170 on Monday.
"The PBOC's decision is predominantly on traders' minds today," Naeem Aslam, chief market analyst at Ava Trade in Dublin, said. "Given that the Chinese growth (rate) is already a major concern for many, the reduction in liquidity by the PBOC is not helping the metal."
China is the biggest consumer of copper, which is used in construction and power cables.
It imported record volumes of copper last month, partly for consumption and partly to ease tight credit conditions. Goldman Sachs sees Chinese bonded inventories at 700,000 tonnes, up from 550,000 tonnes since the beginning of the year, it said in a note.
The dollar hit a seven-week low against the euro and was trading near a six-week low against a basket of currencies .
A weak U.S. currency underpins industrial metals by making it less expensive for foreign investors to purchase dollar-priced commodities.
"We should see a generally firmer tone in most commodity markets over the short term as softer U.S. macro data should keep the dollar under pressure and provide further support for the (base metals) group," Ed Meir, an analyst at INTL FCStone said.
In the week ahead, the focus will be on the U.S. Federal Reserve's tapering of monetary stimulus, with the release of its minutes on Wednesday, and on China's slowdown, with a purchasing managers' index due on Thursday.
Both factors have been behind this year's sell-off in emerging markets.
U.S. manufacturing last week recorded its biggest drop in more than 4-1/2 years in January as cold weather disrupted production. It was the latest indication that the world's biggest economy got off to a weak start this year.
Global miner BHP Billiton topped market forecasts with a 31 percent rise in first-half profit on Tuesday but gave a cautious outlook on Chinese growth.
Its copper output grew by 6 percent, and total full-year 2014 production is seen unchanged at 1.7 million tonnes. It also expected the copper market to move back into deficit in the medium term and for supply surpluses in nickel and aluminium to ease.
Benchmark three-month aluminium on the LME firmed after producer Alcoa Inc announced it would close its Point Henry smelter and two rolling mills in Australia, removing around 190,000 tonnes of annual capacity, equal to about 10 percent of the country's total output.
The LME three-month aluminium contract was at $1,747.25 a tonne from a last bid of $1,732 on Monday. It has risen 1.7 percent so far this month after falling 5 percent last month and more than 13 percent last year.
United Company Rusal, the world's largest aluminium producer, also indicated on Tuesday that its output of the metal could fall to 3.5 million tonnes this year from 3.9 million last year.
The announcements underscored the dire market conditions facing producers amid a flood of new Chinese capacity.
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 ($1 = 6.0641 Chinese yuan)
(Additional reporting by Harpreet Bhal in London and Melanie Burton in Sydney; editing by Jane Baird)