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METALS-Copper hits month low after Fed raises rate hike expectations

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm20 (Adds comment, detail, updates prices, changes dateline)

LONDON, Sept 21 (Reuters) - Copper hit its lowest in more than a month while nickel slid more than 3 percent on Thursday after the Federal Reserve raised expectations of one more rate hike this year, boosting the dollar.

After concluding a two-day policy meeting on Wednesday, the Fed said it expects one more increase by the end of the year despite a recent bout of low inflation. The dollar rose in response, extending gains to hit a two month high versus the yen on Thursday and making dollar priced metals costlier for non-U.S. investors.

"The losses are mostly currency driven. The dollar was the main culprit behind the August gains so now to see a higher dollar is pounding all the metals," said Gianclaudio Torlizzi, partner at metals consultancy T-Commodity.

He added, however: "Our approach is to look to the current weakness (in copper) to go long. The metal is holding above the $6,600 resistance, and on the fundamental side demand is not booming (but) supplies have been reduced so we don't need such strong demand to put the metal in deficit."

FUNDAMENTALS

* LME COPPER: London Metal Exchange copper slipped by 0.9 percent to $6,468 a tonne by 1025 GMT. Prices earlier fell to $6,428 a tonne, the weakest since mid August.

* LME ALUMINIUM: LME aluminium eased from five-year highs reached the previous session but expectations of tighter supply into early next year underpinned prices.

* CHINA ALUMINIUM PRODUCTION: Production cuts are already feeding through into lower output from the world's top producer of the metal after Beijing's campaign to close illegally built capacity earlier this year. Total Chinese production in August was 2.64 million tonnes, compared with 2.686 million tonnes in July, the International Aluminium Institute said.

* NICKEL: The Shanghai Futures Exchange (ShFE) said on Thursday it would triple the transaction fee on its nickel contract for January 2018 delivery in its latest bid to snuff out speculators.

* COPPER DEFICIT: The global world refined copper market showed a 70,000 tonnes deficit in June, compared with a 50,000 tonnes deficit in May, the International Copper Study Group (ICSG) said in its latest monthly bulletin.

* ZINC: Prices for steelmaking ingredient zinc fell more than 1.5 percent after Chinese iron ore futures tumbled nearly 5 percent, reflecting oversupply concerns as steel demand in top consumer China looks to be at risk.

(Additional reporting by Melanie Burton; Editing by Elaine Hardcastle)