* Copper prices ease, investors assess PBOC liquidity drain * Dollar gains 0.4 pct, weighs on commodities * Range trading seen for next two-three weeks, then higher * Coming Up: US CPI, weekly jobless claims (1230 GMT) By Nick Trevethan SINGAPORE, March 18 (Reuters) - Copper prices fell in London and Shanghai on Thursday, snapping two days of gains on a firmer dollar and as the market assessed the impact of China's latest efforts to cool markets. Copper began its run on Tuesday, boosted by the Federal Reserve saying the still sickly U.S. job market was a reason to keep keep monetary conditions loose for the longer term. But a firmer dollar and fresh debate about Chinese inflation and the impact of tighter monetary policy there on metals demand pushed some investors to take money off the table. In its latest measure to cut the amount of cash surging through the economy, China's central bank will drain 80 billion yuan ($11.7 billion) through 91-day bond repurchase agreements on Thursday in its regular open market operations. [ID:nTOE62H02T] That is in addition to the People's Bank of China's (PBOC) planned drain of 130 billion yuan via the sale of three-month bills later, the single biggest sale of such bills in its regular open market operations on record. "Fundamentally demand remains OK and I don't think this will have a huge impact on the market," Bonnie Liu, analyst at Macquarie Bank in Shanghai, said. She went on to say that Beijing's confidence that it could drain liquidity without adversely affecting the economy should be taken as a sign of strength and copper could be gearing up for a fresh run higher. "Prices will be in ranges in the next two to three weeks before we see things moving higher." She expected copper to trade between $7,200 and $7,600 before a breakout that could see copper move nearer to $8,000 during the year. Three-month copper on the London Metal Exchange CMCU3 fell $49.50 to $7,484.50 a tonne by 0703 GMT having rallied 1.8 percent to $7,534 on Wednesday, its highest close in almost two weeks MCUKA3. Benchmark third-month Shanghai copper SCFc3 slipped 600 yuan to 59,540 yuan. The dollar rose to 79.958 versus a basket of currencies .DXY, denting the appeal of dollar-priced assets like copper for holders of other currencies. Supporting sentiment, the two-week trend of falling copper stocks continued with another 2,475 tonnes of metal leaving warehouses, including 1,000 tonnes out of Busan, South Korea, bringing total LME stocks to a two-month low of 525,575 tonnes. <0#LME-STOCKS> However, the positive outlook was by no means universal. BHP Billiton's (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) outgoing chairman Don Argus said the company remained cautious about the economic outlook in a farewell letter to shareholders. [ID:nSGE62G0KW] "We do remain cautious about the state of the global economy and note the recent International Monetary Fund report which highlighted the gap in growth between developed and developing economies," Argus said. Nickel CMNI3 was flat, trading at $22,250, having rallied 20 percent this year, making it the strongest of the base metals metals complex. A strike in Canada, delays in bringing the Goro mine into production and most recently, a problem at BHP Billiton's Nickel West operation in Kwinana, Australia, have helped lift prices. On Wednesday, the big miner said nickel production at its refinery in western Australia had been interrupted. "I can confirm that production has been interrupted at Kwinana nickel refinery due to a temporary shortage of hydrogen," a BHP spokesman said on Wednesday. He was unable to offer any information on how long the problems would last, or whether it was a full closure. [ID:nLDE62G0WG] Base metals prices at 0703 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 7484.50 -49.50 -0.66 7375.00 1.48 SHFE Cu* 59540.00 -600.00 -1.00 59900.00 -0.60 LME Alum 2280.25 -14.75 -0.64 2230.00 2.25 SHFE Alum* 16675.00 -145.00 -0.86 17160.00 -2.83 COMEX Cu** 341.00 5.30 +1.58 332.75 2.48 LME Zinc 2327.50 -17.50 -0.75 2560.00 -9.08 SHFE Zinc 18715.00 -280.00 -1.47 21195.00 -11.70 LME Nickel 22250.00 0.00 +0.00 18525.00 20.11 LME Lead 2247.00 -8.00 -0.35 2432.00 -7.61 LME Tin 17610.00 -140.00 -0.79 16950.00 3.89 LME/Shanghai arb^ 238 Dollar/yuan 6.8264 \ 6.8284 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

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