* Market eyes Chile's copper miner Codelco as strike looms * LME zinc stocks see biggest inflow in five months * COMING UP: September durable goods orders at 1230 GMT (Updates with comment, official prices) By Melanie Burton LONDON, Oct 27 (Reuters) - Copper turned further from more than two-year highs on Wednesday as the dollar climbed on speculation the U.S. Fed may buy fewer bonds than first thought, while news of an exchange-traded product filing cushioned its fall. Benchmark copper on the LME CMCU3 traded in official rings $8,340 a tonne having closed at $8,511 on Tuesday. The metal used in power and construction hit its highest since July, 2008, at $8,554 the prior session and is within five percent of record highs at $8,940 a tonne from early that month. Lead CMPB3, which hit a new peak since January earlier at $2,619 was untraded and bid lower at $2,552, from $2,594. "The rising dollar has taken some of the heat out of the rally," said analyst David Wilson of Societe Generale. A rising dollar makes commodities more expensive for holders of other currencies. The dollar rose broadly on Wednesday as speculation the U.S. Federal Reserve would take a gradualist approach to more quantitative easing next week prompted players to liquidate some short dollar positions. Investor appetite was providing background support, after a new exchange-traded product application was registered with U.S. regulators late on Tuesday, Wilson added. "You still have initial momentum from the ETFs launches, which is adding to bullish sentiment," he said. BlackRock Asset Management (BLK.N: Quote) has joined the race to provide a copper ETP to institutional and retail investors. [ID:nN26444469]. It follows on the heels of filings by ETF Securities and JP Morgan [ID:nLDE69A0I5] [ID:nLDE69O174]. "Metals have risen so far on the bad news of late, on fears of quantitative easing... and now they are overbought," an LME ring trader said. Meawhile, market focus is shifting to Chile. Workers at the world's No. 3 copper mine, Collahuasi, are preparing to vote on whether to reject or approve a wage offer dubbed "insufficient" by their union, which has called for a strike. [ID:nN27206743] In data that could impact metals markets on Wednesday via currencies, the Commerce Dept releases September durable goods orders at 1230 GMT and new home sales for September at 1400 GMT. Federal Reserve Bank of Chicago releases its Chicago Fed Midwest Manufacturing Index for September at 1600 GMT. ZINC OVERSHOOTS Three-month zinc CMZN3 fell on Wednesday to trade at $2,541, from a close of $2,615 per tonne. It has retraced four percent from nine-month peaks of $2,638.75 touched on Tuesday. The metal used in galvanising has overshot its fundamentals, said Commerzbank in a note, given ample global supply. "The price rally for zinc and lead has least fundamental justification among base metals," it said. "Production at Red Dog zinc mine, one of the largest in the world, is being expanded at a faster rate than planned." Diversified Canadian miner Teck Resources (TCKb.TO: Quote) said its zinc business reported a 28 percent rise in operating profit, due to higher zinc prices and improved shipment volumes. [ID:nN26118379]. As well, the global zinc market was in surplus by 166,000 tonnes in the first eight months of the year, a study group said this week. [ID:nLDE69P1A8] "The market thus remains very well supplied with zinc," Commerzbank added. Meanwhile, LME-bonded warehouses registered the largest zinc inflow in some five months, data showed today. MZN-STOCKS Aluminium CMAL3 was at $2,355 a tonne from $2,390. Nickel CMNI3 traded at $22,950, from $23,300, having hit its lowest in a month at $22,790 earlier. Tin declined to $26,225, down 4.5 percent from record highs of $27,338.50 mid-month. LME inventories rose 90 tonnes to 12,825 tonnes, the highest since end-September, data showed. MSN-STOCKS Metal Prices at 1216 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 378.05 -8.45 -2.19 334.65 12.97 LME Alum 2355.00 -35.00 -1.46 2230.00 5.61 LME Cu 8344.00 -167.00 -1.96 7375.00 13.14 LME Lead 2552.00 -42.00 -1.62 2432.00 4.93 LME Nickel 22925.00 -375.00 -1.61 18525.00 23.75 LME Tin 26225.00 -475.00 -1.78 16950.00 54.72 LME Zinc 2541.00 -74.00 -2.83 2560.00 -0.74 SHFE Alu 16430.00 -220.00 -1.32 17160.00 -4.25 SHFE Cu* 64030.00 -490.00 -0.76 59900.00 6.89 SHFE Zin 20360.00 -630.00 -3.00 21195.00 -3.94 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by Melanie Burton, editing by Anthony Barker)

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