* Dollar stays weak on Fed stimulus steps, supports commodities * Some investors question whether Fed move will feed into real economy * Markets eye euro zone factory data this week By Maytaal Angel LONDON, (Reuters) - Copper slipped on Monday as investors paused to re-assess the impact of a new round of U.S. monetary stimulus, though a weak dollar meant the red metal still retained most of the previous session's steep climb to a 4-1/2 month peak. Financial markets were euphoric after the Federal Reserve promised late on Thursday to embark on another round of quantitative easing, saying it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. The European Central Bank had already impressed investors a week earlier by pre-announcing unlimited, albeit conditional, secondary market purchases to bring down sky-high yields on bonds issued by struggling euro zone members such as Spain. Having had some time to digest these moves, some investors were cautious on Monday over the prospects for prolonged growth in industrial metals given slowing activity in China, and given the fact that the central bank measures will take time to feed through to the real economy. Investors were also painfully aware that the global financial reforms are not over yet and that southern Europe has yet to solve its fiscal problems and lack of competitiveness. "The weaker dollar has fed into stronger commodity prices, but it's more a speculative move on inflation expectations rather than any optimism on growth," said CMC Markets senior market strategist Brenda Kelly. "The ECB is buying time. It will make a difference to future debt, not to existing debt. In the U.S. we've seen an increase in 10 year bond yields... I think they'll be using lot of this (new money) to pay down existing debt, it won't necessarily feed into growth." Three-month copper on the London Metal Exchange had ticked down 0.50 percent to $8,338 per tonne by 0924 GMT, after touching a high of $8,386.25 earlier - near the 4-1/2 month top of $8,411 hit in the previous session. LME copper rose 3.8 percent on Friday - its largest daily percentage gain since June 29 and is now up nearly 10 percent on the year. Copper prices were also supported by the dollar, which hovered near a seven-month low versus a basket of currencies on Monday. A soft dollar makes commodities priced in the greenback cheaper for holders of other currencies. Elsewhere, hedge funds and other big speculators pumped more than $6 billion into U.S. commodity markets last week, the most in three weeks, just before the Federal Reserve announced a third round of stimulus for the U.S. economy, trade data showed on Friday. According to the median of forecasts from a Reuters poll on Friday, the Federal Reserve will buy a total of $600 billion of bonds under its new stimulus programme, and will look for a U.S. unemployment rate of 7 percent before it halts its buying. COPPER AS COLLATERAL Capping some of the metals' gains were worries about China's property market, a top user of metals for construction but also for collateral as developers use imports to get cheaper credit. Chinese property shares extended their losses on Monday, slipping more than 3 percent at one point after the eastern city of Nanjing was reported over the weekend to have reintroduced housing price controls to curb soaring prices. In the week ahead, factory activity will come back to the fore with a series of industrial sector reports due for release. "This week, focus will shift toward economic numbers with euro zone PMIs due on Thursday. This could dampen the positive sentiment slightly," Credit Suisse said in a research note. In other metals traded, aluminium fell 0.98 percent to $2,173.50 a tonne, with the cash contract trading at a 50 cent premium to the three-month benchmark for the first time since May last year. The market structure, known as backwardation, comes despite LME stocks standing near a record 5 million tonnes, and could indicate that finance deals and other bank and trading house strategies have tied up even more of the metal. Tension between producers and consumers rose last week in annual aluminium supply contract negotiations, as the battle between warehouses for the light metal continues to propel premiums to record highs, despite a glut. Tin fell 0.85 percent to $21,490 a tonne, having earlier hit its highest since early May at $21,750, while zinc , used in galvanizing, fell 0.90 percent to $2,097. Battery material lead fell 0.66 percent to $2,250, while stainless steel ingredient nickel rose 0.93 percent to $17,940, having earlier hit its highest since early May at $17,975. Metal Prices at 0928 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 382.00 -2.85 -0.74 334.65 14.15 LME Alum 2200.00 5.00 +0.23 2230.00 -1.35 LME Cu 8380.00 0.00 +0.00 7375.00 13.63 LME Lead 2264.00 -1.00 -0.04 2432.00 -6.91 LME Nickel 17775.00 0.00 +0.00 18525.00 -4.05 LME Tin 21675.00 0.00 +0.00 16950.00 27.88 LME Zinc 2116.00 0.00 +0.00 2560.00 -17.34 SHFE Alu 15785.00 -50.00 -0.32 17160.00 -8.01 SHFE Cu* 59810.00 -660.00 -1.09 59900.00 -0.15 SHFE Zin 15660.00 -100.00 -0.63 21195.00 -26.11 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Source