* Copper inventories rise for second day * Dollar falls, helps limit metals losses * Coming up: Fed statement 1630 GMT, briefing 1815 GMT (Recasts, add comments, details, pvs SINGAPORE) By Sue Thomas LONDON, April 27 (Reuters) - Copper fell on Wednesday as inventories of the metal continued to build and as investors tread carefully ahead of a U.S. Federal Reserve decision on monetary policy, but a weaker dollar kept further losses in check. Benchmark copper on the London Metal Exchange traded at $9,406 at 0921 GMT, from a close of $9,545 a tonne on Tuesday. Copper inventories rose 3,400 tonnes to 463,500 tonnes, the highest level since mid June last year. Stocks have climbed for 13 of the last 15 sessions, indicating weak demand for a metal used in power and construction. "The very high inventory levels are definitely a concern, but I expect them to come down over the next few months. If this should happen, then the copper price may have room to further go up," Commerzbank analyst Daniel Briesemann said. "We may have to change our view if the very high inventory levels persist," he said, adding that a weaker dollar was helping to limit further losses in the copper price. The expectation the Fed will stick to its ultra-loose monetary policy and point to low interest rates pushed the dollar to a 16-month low against the euro. A weaker dollar makes metals cheaper for holders of other currencies. Following a two-day policy meeting, Federal Reserve Chairman Ben Bernanke will likely hammer home the case for a patient approach to withdrawing the central bank's extensive support for the U.S. economy, the world's largest. "The dollar is playing a role to help," Briesemann said. "At the moment it's definitely the time to go on vacation, that's more or less why the markets are very calm and maybe a little bit depressed at the moment." After the Easter long weekend which ended on Monday, Britain has another short week, with markets closed on Friday for a royal wedding and Monday for May Day. COAL SHORTAGE Among the metals complex, aluminium fared best. The metal was almost flat at $2,746 from a close of $2,747. Key Chinese industrial provinces have been hit by power shortages which have threatened to shut some small aluminium smelters, and larger ones face lower prices. Aluminium is one of the most energy-intensive metals to produce. China, the world's biggest market and maker for aluminium and lead, normally hits peak electricity demand in the summer and can often face shortages, leading provincial officials to cut supplies to intensive energy users. Meanwhile, Japanese shipments of aluminium products fell 8.5 percent in March from a year earlier, logging the first year-on-year decline in 16 months as last month's devastating earthquake took a toll on demand from industries across the board. Zinc, used in galvanizing, was $2,255 from $2,260 at the close on Tuesday. Belgium's Nyrstar, the world's biggest producer of zinc, said a fire had struck its plant in Belgium but it was too early to determine what damage had been done. Tin was at $32,500 from $32,700 while battery material lead was $2,538 from $2,558 and nickel was at $26,500 from $26,650. Metal Prices at 0950 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent move COMEX Cu 427.05 -4.85 -1.12 444.70 -3.97 LME Alum 2746.00 -1.00 -0.04 2470.00 11.17 LME Cu 9544.00 -1.00 -0.01 9600.00 -0.58 LME Lead 2558.00 0.00 +0.00 2550.00 0.31 LME Nickel 26650.00 0.00 +0.00 24750.00 7.68 LME Tin 32720.00 20.00 +0.06 26900.00 21.64 LME Zinc 2260.50 0.50 +0.02 2454.00 -7.89 SHFE Alu 16810.00 -25.00 -0.15 16840.00 -0.18 SHFE Cu* 69550.00 -350.00 -0.50 71850.00 -3.20 SHFE Zin 17245.00 -95.00 -0.55 19475.00 -11.45 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Melanie Burton; Editing by Alison Birrane)

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