* Copper falls across markets lifted by a firmer dollar * US lawmaker default talk a "horrible idea"; destroy demand * China trade data seen positive; but arb drew in bonded metal (Updates prices. Adds quotes and details) By Nick Trevethan SINGAPORE, June 8 (Reuters) - Copper fell by 1 percent on Wednesday in London, New York and Shanghai, with international markets reversing early gains as the dollar recovered from a one-month low after a bleak assessment of the U.S. economy by Federal Reserve officials. Three-month copper on the London Metal Exchange fell $82 to $9,058 a tonne by 0321 GMT. The most active contract on the Shanghai Futures Exchange SCFcv1, August, fell 0.8 percent to 67,730 yuan per tonne. The price gap between the two markets narrowed to 900 yuan from more than 1,000 yuan late Friday. " The broad market is really directionless. Longs are getting killed, shorts are getting killed . Everyone s getting killed and nothing looks like changing. The market will stick to its ranges for months," said a trader in Singapore. " There are so many hidden booby traps in Europe and unknowns in China. I think the market will want to wait until LME week bef o re really showing its intentions ," the trader said. Copper was seen ranging between $8,700 to $9,300 a tonne in the short term, dictated by macro events and market position, traders said. Near-term sentiment remained clouded by the state of the U.S. economy -- a risk underscored by Federal Reserve Chairman Ben Bernanke who acknowledged the halting nature of the recovery. New York Federal Reserve Bank President William Dudley described the recovery as "distinctly subpar." [ID:nN07142566] The dollar, up 0.2 percent . recovered from one-month lows against a basket of major currencies after the Fed chairman's sombre assessment of the U.S. economy, while offering no hint of providing more stimulus to accelerate growth. "There are a lot of non-specialists trading copper these days on the back of currency moves," said a trader in Shanghai, adding: "A move like this would normally send you looking for headlines on fundamentals in metals, but these days I look for currency headlines." The gain in the dollar suggested that the market was shrugging off the belief held by a growing number of Republican lawmakers that a brief U.S. default might be an acceptable price to pay if it forces the White House to deal with runaway spending. But many on Wall Street fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling U.S. dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros. [ID:nN07154296] "This has significant downside risks for industrial raw material, and is highly positive for precious metals. It has dire implications for the economy at a time when the macro data is softening," said Ben Westmore, commodities economist at National Australia Bank. "Then there are flow on effects on what China needs to do with its dollar holdings. It's just a horrible idea." On Tuesday, Guan Tao an official at the State Administration of Foreign Exchange, said China should guard against risks from "excessive" holdings of U.S. assets as Washington could pursue a policy to weaken the dollar. [ID:nL3E7H71AA] STRIKE MAY END Price support for copper may also be fading from a crippling mine protest in Chile that has more than halved output from El Teniente, the world's fifth largest copper mine, owned by Codelco. Codelco CEO Diego Hernandez told Reuters on the sidelines of an industry conference in New York on Tuesday that he expected the protests to be resolved as soon as this week. [ID:nN07155341] More positively, analysts are looking out for Chinese trade figures due on Friday. The market expects a recovery in refined imports from April. [ID:nL3E7GN14P][ID:nL3E7H30DM] Traders said refined copper arrivals in May should rise due to improved arbitrage. But the price gaps have not been big enough to attract large spot arrivals, capping the inflow below 200,000 tonnes in May versus 160,236 tonnes in April. "Imports in May should be slightly more than April and larger quantities should arrive in June and July after the arbitrage improved in May," Jing Chuan, chief researcher at Hua Tai Great Wall Futures in Shan ghai said demand had risen in May, much of which has been covered by bonded stocks. "May's arrivals should be slightly more than April and a significant rise could be seen in June." Longer term sentiment may also see a lift after Southern Copper said it will review $2 billion in planned investments in Peru after a leftist former army commander won the country's presidential election. Ollanta Humala wants to impose a windfall tax on Peru's vast mining sector, worrying investors who think he could undermine the country's economic boom. Southern was already forced to put its $1 billion Tia Maria copper project on hold due to stiff opposition from farmers worried about water shortages in the area. [ID:nN07124529]

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