By Michael Taylor LONDON, Sept 20 (Reuters) - Copper climbed to a freshfive-month peak on Monday, buoyed by a falling dollar and markettalk of further quantitative easing in the United States. Benchmark copper for three month delivery on the LondonMetal Exchange traded at $7,750 a tonne in LME rings from $7,720at the close on Friday. The metal, used in power and construction, hit $7,812earlier on Monday, its highest level since April 26. "The market continues to trade higher," said RBC CapitalMarkets trader Randy North. "It's following the weaker dollar. "The copper supply situation is still pretty tight." The dollar slipped broadly on speculation the FederalReserve may flag the need to inject more stimulus into thestruggling U.S. economy when it announces its latest policydecision on Tuesday. A weak U.S. currency makes metals priced in dollars lessexpensive for holders of other currencies. "Dollar weakness translates into base metals strength,"added North. "Whatever action the Fed takes and resulting impacton the dollar, if the dollar continues to weaken, you'll seesupport in the copper price." Analysts also say that if the U.S. pumps more money into theeconomy, it will further boost fund buying, which has helpedlift base metals prices in recent weeks. Also aiding overall sentiment in recent months has been agrowing trend of falling LME inventories. The Latest LME data showed that on Friday, copper stocksslipped 1,700 tonnes to 382,500 tonnes, having fallen from 6-1/2year highs at 555,075 tonnes in mid-February. Aluminium touched $2,223, its highest level since Aug. 6,and was untraded but last bid at $2,208 in LME rings versus alast bid at $2,180 on Friday. LME stocks for the metal, used in transport and packaging,shed 5,050 tonnes to 4.38 million tonnes. A large portion ofthose aluminium stocks are tied up in finance deals. ETF TALK HEATS UP A recent rise in cancelled warrants -- material earmarkedfor delivery -- has also helped boost sentiment. The latest LMEdata showed that aluminium cancelled warrants were at 251,825tonnes from 150,875 tonnes the day before. "There is speculation, and it is just speculation, that thisis further evidence of the pre-imminent launch of an ETF," DavidThurtell, analyst at Citi said on aluminium. Market talk of a possible physical copper ETF was alsoevident. UK-based ETF Securities declined on Monday to commenton talk that it is planning to soon launch a physically backedcopper exchange traded product (ETP: 47.77 ,0.00 ,0.00%). "It may just be chat ahead of LME week next month or maybejust investor idle speculation following on from even strongerrumours that two investment banks (with backing from Glencoreand RUSAL) are looking into a physical aluminium ETF for the endof 2010," Bernstein Research said in a note. Trading was expected to slow this week however, due to amarket holiday in Japan on Monday and Chinese holidays fromWednesday to Friday. China, the world's top metals consumer,will also be shut for a week from Oct 1. On a thin economic calendar on Monday, investors awaithousing data from the United States for further direction as thesession progresses. Among other metals, steel making ingredient nickel traded at$23,350 in LME rings from a final bid at $23,200 on Friday. Battery material lead was at $2,215 from $2,202.50, whilezinc traded at $2,180.50 a tonne from $2,151 and tin was at$23,650 from $23,600. On Friday, tin, used in electrical solder, hit a two-yearhigh at $23,800 a tonne. "Shipments from Indonesia, the world's largest exporter mayfall as much as 19 percent this year according to the tradeministry," investment bank Fairfax said in a note. "Expectationsare for exports to fall to about 80,000 tons this year fromclose to 100,000 in 2009 as severe weather impacted mining. Metal Prices at 1212 GMT Metal Last Change Percent Move End 2009 Ytd Percent move#VALUE! LME Alum 2204.00 50.00 +2.32 2230.00 -1.17 LME Cu 7747.00 27.00 +0.35 7375.00 5.04 LME Lead 2211.00 8.50 +0.39 2432.00 -9.09 LME Nickel 23225.00 -25.00 -0.11 18525.00 25.37 LME Tin 23500.00 -100.00 -0.42 16950.00 38.64 LME Zinc 2179.00 28.00 +1.30 2560.00 -14.88 SHFE Alu 15760.00 70.00 +0.45 17160.00 -8.16 SHFE Cu* 60250.00 150.00 +0.25 59900.00 0.58 SHFE Zin 18105.00 150.00 +0.84 21195.00 -14.58** 1st contract month for COMEX copper* 3rd contract month for SHFE AL, CU and ZNSHFE ZN began trading on 26/3/07 (Editing by James Jukwey)

Source