* Investors said silver prices driven down illegally
* HSBC had been previously dropped as a defendant
NEW YORK, March 27 (Reuters) - Silver investors failed to show that JPMorgan Chase & Co conspired to drive down the metal's price, and an antitrust lawsuit accusing the largest U.S. bank of price-fixing should be dismissed, a federal appeals court ruled.
The 2nd U.S. Circuit Court of Appeals said the investors, who traded COMEX silver futures and options contracts, failed to show that JPMorgan violated federal antitrust and commodities laws by having distorted silver prices at their expense between 2007 and 2010.
Among the allegations were that the bank would amass huge short positions that market conditions did not justify, and make "fake" late-day trades when market volume was thin.
Thursday's order upheld a March 2013 ruling by U.S. District Judge Robert Patterson, who also sits in Manhattan.
Christopher Lovell, a partner at Lovell Stewart Halebian Jacobson representing the investors, did not immediately respond to requests for comment. JPMorgan spokesman Brian Marchiony declined to comment.
Investors had filed at least 43 complaints in 2010 and 2011 that accused banks of amassing hundreds of millions of dollars in illegal profit through silver price-fixing.
After the lawsuits were consolidated, HSBC Holdings Plc was dropped from the case in September 2011, leaving New York-based JPMorgan as the main defendant.
In Thursday's order, a three-judge 2nd Circuit panel said it could not infer from allegations that JPMorgan took large and "uneconomic" short positions in silver that the bank intended to manipulate prices, or conspired with floor brokers to do so.
"An inference of intent cannot be drawn from the mere fact that JPMorgan had a strong short position," the panel said.
The Commodity Futures Trading Commission began probing silver price-fixing in 2008, and two years later proposed regulations to give it greater power to stop the practice.
The case is In re: Commodity Exchange Inc Silver Futures and Options Trading Litigation, 2nd U.S. Circuit Court of Appeals, No. 13-1416.
(Reporting by Jonathan Stempel in New York; editing by Andrew Hay)