* Barclays suggests shorting base metals if rally continues * Copper, aluminium fundamentals weak * Coming Up: U.S. weekly jobless claims ; 1330 GMT By Silvia Antonioli and Stephen Eisenhammer LONDON, Dec 13 (Reuters) - Copper fell on Thursday as an impasse in U.S. budget talks showed little sign of being resolved and a Federal Reserve decision to tie its monetary policy to unemployment raised concerns that its economic stimulus might be limited. Benchmark copper on the London Metal Exchange fell 1.2 percent to $8,030 a tonne in official trading from a last bid of $8,130 at the close on Wednesday. Sharp differences remained between congressional Republicans and the White House in negotiations to avoid the "fiscal cliff" of steep tax hikes and budget cuts. A failure to strike a deal could send the world's largest economy back into recession, with negative implications for metals demand. Some investors were also worried by the Fed's decision to link its monetary stimulus to unemployment and inflation numbers, which could limit the length of its intervention. The Fed said it planned to buy $45 billion in longer-term Treasuries each month on top of its $40 billion monthly purchase of mortgage-backed securities as expected, but set unemployment and inflation thresholds for its exit strategy. "The Fed has given some conditions, and this has scared the market a bit. But in my opinion, the losses in metals have more to do with uncertainty on the fiscal front than with disappointment on monetary easing," T-commodity consultant Gianclaudio Torlizzi said. "After the gains in metal recently, some investors are also closing their positions and taking profit, worried that if a fiscal agreement is not found, higher taxes could hit capital gains, too." Copper prices have risen more than 7 percent in the past month, and the metal is now up by more than 6 percent on the year. Prospects for the euro zone got a boost as the European Union reached a landmark deal to make the European Central Bank the bloc's top banking supervisor. The deal is a crucial step towards a European banking union. German Chancellor Angela Merkel said, "The importance of the deal cannot be assessed too highly." In industry news, Aurubis, Europe's biggest copper smelter, posted earnings before taxes (EBT) of 516 million euros ($672.9 million) in its full 2011/12 fiscal year ended Sept. 30, up from 497 million the previous year. WEAK FUNDAMENTALS Barclays suggested shorting base metals should the rally seen in the last month continue, given that fundamentals remain weak especially for aluminium and copper. "Aluminium fundamentals are the weakest for any base metal at present, but price volatility tends to be quite low. Instead, we recommend shorting copper if cash prices rise much above $8,500," it said in a research note. "A large stock overhang in China means its import demand will likely be sharply down on year-ago levels, and following the recent abolition of export taxes on tolled copper, there could be a steady stream of exports early next year, which could turn market sentiment very negative." Aluminium was down 0.7 percent, trading at $2,123 in official rings compared with $2,138 at Wednesday's close. Battery material lead was at $2,292.50 from $2,322, a drop of 1.3 percent. Zinc, used to galvanise steel was down 1.7 percent at $2,060.50 from $2,095, while tin was bid at $22,850, down 1.2 percent from a last bid of $23,135. Stainless steel material nickel fell 1.1 percent to $17,500 from $17,700. Metal Prices at 0113 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 364.50 -6.15 -1.66 344.75 5.73 LME Alum 2120.25 -17.75 -0.83 2020.00 4.96 LME Cu 8020.75 -82.25 -1.02 7600.00 5.54 LME Lead 2285.50 -36.50 -1.57 2034.00 12.36 LME Nickel 17481.00 -219.00 -1.24 18650.00 -6.27 LME Tin 22825.00 -145.00 -0.63 19200.00 18.88 LME Zinc 2061.00 -34.00 -1.62 1845.00 11.71 SHFE Alu 15320.00 35.00 +0.23 15845.00 -3.31 SHFE Cu* 57570.00 -330.00 -0.57 55360.00 3.99 SHFE Zin 15355.00 -90.00 -0.58 14795.00 3.79 ** 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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