METALS-London copper rises as dollar weakens on U.S. inflation data

(Updates prices, adds quotes)

By Mai Nguyen

Sept 15 (Reuters) - Copper prices in London climbed on Wednesday as the dollar came under pressure after data showed a tamer-than-expected rise in U.S. inflation, leading to uncertainty over the U.S. Federal Reserve's timeline to taper its monetary stimulus.

A weaker dollar supports metals prices by making greenback-priced commodities cheaper for holders of other currencies.

Three-month copper on the London Metal Exchange was up 0.4% at $9,481.50 a tonne, as of 0651 GMT, while the most-traded October copper contract on the Shanghai Futures Exchange eased 0.5% to 69,960 yuan ($10,866.22) a tonne.

Underlying U.S. consumer prices increased at their slowest pace in six months in August, suggesting that inflation had probably peaked though it could remain high for a while.

The dollar index stood at 92.632, flat from Tuesday, when it dropped following the U.S. inflation data.

"Softer U.S. inflation data is easing tapering pressure, offsetting some of the demand concerns," ANZ analyst Soni Kumari said.

Putting a lid on prices was China's factory and retail sectors faltering in August with output and sales growth hitting one-year lows as fresh coronavirus outbreaks and supply disruptions threatened the country's economic recovery.

"A seasonal slowdown in (Chinese) construction activity amid tighter financing policy and Evergrande issues have weighed on market sentiment. That said, we expect construction and industrial activity to pick up from September, helping metal demand to improve," she added.

FUNDAMENTALS

* Accelerating production cuts in top producer China will create large shortages of aluminium this year, while worries about supply chain disruptions in Guinea have helped propel prices to 13-year highs.

* The discount of LME cash aluminium on the three-month contract expanded to $21.25 a tonne, its biggest since July 6, indicating easing tightness in nearby supply.

* LME aluminium rose 1.6% to $2,877 a tonne, nickel increased 0.3% to $19,675 a tonne, lead fell 1.2% to $2,246 a tonne while ShFE aluminium shed 1.1% to 22,540 yuan a tonne and ShFE lead was down 1.8% at 14,680 yuan a tonne.

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($1 = 6.4383 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Shounak Dasgupta and Sherry Jacob-Phillips)

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