(Reuters) - Copper fell on Friday as doubts about the likelihood of strong stimulus measures from the U.S. Federal Reserve kept investors cautious, and as signs that Spain may need sovereign aid intensified concerns about the euro zone debt crisis. Three-month copper on the London Metal Exchange slipped from a one-month high hit in the previous session, dropping 0.5 percent to $7,650 a tonne at 0921 GMT, from Thursday's close of $7,684.50 a tonne. The metal used in power and construction is on track to post a 1.4 percent weekly rise. Mixed messages from Fed officials on Thursday, with one playing down the odds of imminent bond buying saying the U.S. economic outlook had brightened and another seeing a lot of reason for more easing, led investors to scale back their expectations of strong stimulus from the Federal Reserve. "After the initial thoughts from the Fed statement yesterday, we saw some short covering (in metals markets) and that has run its course now," said Gayle Berry, analyst at Barclays Capital. "We're not at the point yet where the market's views have changed to add fresh longs as there are still negative headlines out there." Trading volumes were light due to the Northern Hemisphere summer holidays when large parts of the industry in Europe shut for annual maintenance. Reflecting a lack of conviction about copper's short-term price direction, the open interest in the LME copper contract dropped to a 5-1/2 year low "It'll take a lot of conviction to get fresh longs to come in at this point, so we will be facing pressure from the shorts today," said an analyst with an international trading firm, who declined to be identified as he was not authorised to speak to the media. Renewed concerns about the sovereign debt crisis in the euro zone also kept sentiment cautious following news that Spain was in talks with euro zone partners over sovereign aid, although it has not made a final request for a bailout, three sources with knowledge of the matter told Reuters. The euro zone's fourth-largest economy is the latest hot spot in the 2-1/2-year euro zone debt crisis as concerns remain about its ailing banking sector, which sought a 100-billion-euro European lifeline in June, and its highly indebted regions. Putting additional pressure on metals prices was a drop in the euro against the U.S. dollar. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies. CHINA EYED Investors are keen to see signs of further stimulus action from China to help spur a pickup in copper demand in the country that consumes around 40 percent of global refined copper. Latest figures showed copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.8 percent from last Friday. Although the manufacturing sector in the world's second-largest economy contracted at its sharpest pace in nine months in August, market watchers are ruling out a previously expected cut in banks' required reserve ratio after the Chinese central bank injected a seven-month high amount of funds into the financial system. Benchmark aluminium slipped to $1,896.50 a tonne from Thursday's close of $1,904. Zinc fell to $1,848 from $1,862 and lead was flat at $1,952 a tonne. Nickel slipped to $16,377 from Thursday's close of $16,475. Tin rose to $20,015 a tonne from $19,950, supported by concerns about a supply shortfall from Indonesian producers. Metal Prices at 1005 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2011 Ytd Pct move COMEX Cu 347.45 -1.80 -0.52 344.75 0.78 LME Alum 1899.00 -5.50 -0.29 2020.00 -5.99 LME Cu 7647.50 -37.00 -0.48 7600.00 0.63 LME Lead 1957.25 5.25 +0.27 2034.00 -3.77 LME Nickel 16397.00 -78.00 -0.47 18650.00 -12.08 LME Tin 20070.00 120.00 +0.60 19200.00 4.53 LME Zinc 1853.75 -8.25 -0.44 1845.00 0.47 SHFE Alu 15355.00 -5.00 -0.03 15845.00 -3.09 SHFE Cu* 55740.00 -360.00 -0.64 55360.00 0.69 SHFE Zin 14635.00 -15.00 -0.10 14795.00 -1.08 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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