* Many hope U.S. recovery risks will steer Fed to stimulus * Coming Up: U.S. FOMC rate decision (Updates prices; adds quotes, details) By Carrie Ho SHANGHAI, June 20 (Reuters) - London copper slipped on Wednesday on worries over Spain's debt problems and as investors cashed in on gains made the previous day, but talk of further stimulus by the U.S. Federal Reserve that could lift demand for industrial metals lent support. The U.S. Federal Reserve concludes a two-day policy meeting later, with expectations high that the central bank will extend its bond-buying programme dubbed "Operation Twist" to shore up the world's largest economy. Three-month copper on the London Metal Exchange was down 0.6 percent at $7,567.50 a tonne by 0727 GMT, after rising 1.3 percent on Tuesday. The most-active October copper contract on the Shanghai Futures Exchange climbed 0.4 percent to close the session at 54,910 yuan ($8,600) a tonne, catching up with previous gains in London. "With Bernanke (Fed Chairman Ben Bernanke) speaking tonight, most investors will want to close off their positions by this afternoon, including the fresh longs which entered the market this morning," said Orient Futures Derivatives Director Andy Du. Should the Fed decide to roll out more stimulus measures, copper prices will likely be boosted as the liquidity provided by previous doses of Fed stimulus had lifted riskier assets. Financial markets have become highly sensitive to expectations of further monetary easing moves, with global equities and commodities tending to rise and the dollar coming under pressure when action is seen as increasingly likely. "ShFE October copper contract price is also boosted by investors rolling over their September contracts. The investors involved are selling off their September contract and simultaneously buying the same volumes in October," Du added. A technical analysis of Shanghai copper suggest that it may end the current rebound soon, as indicated by its wave pattern and a Fibonacci ratio analysis, said Reuters analyst Wang Tao. Shanghai copper prices have climbed 5 percent since hitting an eight-month low in June. The recent drop in prices have encouraged some end-users to restock, in turn helping to draw down copper inventories held at exchange and bonded warehouses. Still, analysts have cautioned that Chinese end-users were still buying on a hand-to-mouth basis amid an uncertain economic outlook and sluggish domestic demand. Hopes of a Fed stimulus were also tempered by fears that Spain's debt crisis could spiral out of control, with its soaring borrowing costs showing that a euro zone deal to lend its banks up to 100 billion euros ($126 billion) had not solved its problems or restored investor confidence. It also suggests more aid may be needed to fix its finances. In China, a group of senior advisers have called on the government to relax property market restrictions to shore up its slowing economy, a state-backed newspaper reported on Wednesday. Such a move will likely boost base metal demand from the real estate sector. But Chinese copper consumers were becoming more cautious about restocking copper based on positive policy announcements or potential policy actions, as the country moves closer to changing its top leaders later this year. "Investors are afraid to make any big moves in this climate of uncertainties. Besides the euro zone, we are also facing a lack of clear policy direction in China," said a copper buyer. Base metals prices at 0727 GMT Metal Last Change Pct Move YTD pct chg LME Cu 7567.50 -41.50 -0.55 -0.43 SHFE CU FUT OCT2 54910 240 +0.44 -1.29 LME Alum 1922.00 -3.50 -0.18 -4.85 SHFE AL FUT OCT2 15750 65 +0.41 -0.57 HG COPPER JUL2 341.65 -1.70 -0.50 -0.57 LME Zinc 1892.00 -7.00 -0.37 2.55 SHFE ZN FUT OCT2 14940 60 +0.40 0.98 LME Nickel 17033.00 -62.00 -0.36 -8.96 LME Lead 1910.00 -2.50 -0.13 -6.14 SHFE PB FUT 15060 65 +0.43 -1.50 LME Tin 19600.00 70.00 +0.36 2.08 LME/Shanghai arb 1070 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

Source