(Adds details, comments and updates prices) MELBOURNE, June 13 (Reuters) - London copper eased on Tuesday from near a two-month high ahead of the U.S. Federal Reserve's interest rate decision due later in the week, while China zinc prices slumped towards seven-month lows alongside falling steel. The U.S. Federal Reserve is widely expected to raise its benchmark interest rate this week due to a tightening labour market and may also provide more detail on its plans to shrink the mammoth bond portfolio it amassed to nurse the economic recovery. Rising interest rates are expected to shore up the dollar, making dollar-based commodities more expensive for holders of other currencies and dampening demand.
* LME COPPER: London Metal Exchange copper fell 0.7 percent to $5733 a tonne by 0726 GMT, extending a small 0.6 percent drop in the previous session.
* TECHNICALS: LME copper has been challenging resistance around the 100-day moving average at $5784 a tonne, having reached $5,832 a tonne on Friday which was its highest since April 10.
* SHFE COPPER: Shanghai Futures Exchange copper fell 1.1 percent to 45830 yuan ($6,742) a tonne.
* ZINC: Premiums for zinc held in China's bonded zones have surged to $195-205 from $155 last week <ZN-BMPBW-SHMET>. Signs of supply stress also showed on the ShFE, where front month prices flaring to more than 2000 yuan above the third month futures contract on Monday.
* ZINC: Industry sources said that shorts on the front month SHFE were being forced to cover their positions. Since ShFE accepts mostly Chinese brands for delivery against its front month futures contract, the spillover effect into LME may be limited, they said.
* U.S. ECONOMY: U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices.
* CHINA ECONOMY: A small majority of traders in China's financial markets think its central bank will likely raise short-term interest rates this week if the U.S. Federal Reserve hikes its key policy rate, as widely expected, according to a Reuters poll.
* COPPER DEMAND: The growing number of electric vehicles hitting roads is set to fuel a nine-fold increase in copper demand from the sector over the coming decade, according to an industry report on Tuesday.
* WAREHOUSES: French bank Natixis has sued metals broker Marex Spectron for $32 million over alleged fraudulent receipts for nickel stored at warehouses in Asia run by a unit of commodities giant Glencore GLEN.L, a court filing showed.
* ZINC: China is likely to step up imports of refined zinc from May, industry sources said last month, as dwindling global supplies of concentrate hit local output of the metal, used to galvanise steel.
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BASE METALS PRICES 0730 GMT Three month LME copper 5736.5 Most active ShFE copper 45830 Three month LME aluminium 1885 Most active ShFE aluminium 13700 Three month LME zinc 2452.5 Most active ShFE zinc 20720 Three month LME lead 2057 Most active ShFE lead 16820 Three month LME nickel 8775 Most active ShFE nickel 72540 Three month LME tin 19165 Most active ShFE tin 144850
BASE METALS ARBITRAGE
LME/SHFE COPPER LMESHFCUc3 324.92 LME/SHFE ALUMINIUM LMESHFALc3 324.92 LME/SHFE ZINC LMESHFZNc3 734.71 LME/SHFE LEAD LMESHFPBc3 -145.5
LME/SHFE NICKEL LMESHFNIc3 2273.0
($1 = 6.7975 Chinese yuan renminbi)
(Reporting by Melanie Burton; Editing by Vyas Mohan)