By Francesca Freeman LONDON--Copper futures on the London Metal Exchange fell Thursday after the U.S. Federal Reserve again reduced its monthly bond purchases and said it may raise interest rates sooner than expected. The LME's flagship three-month copper contract was down 1.6% at $6,445 a metric ton in morning European trade. News from the Federal Open Market Committee and Federal Reserve Chair Janet Yellen spooked growth-related assets such as equities and base metals, as investors feared that a further reduction in economic stimulus and higher interest rates would dent U.S. economic growth. Base metals are used widely in construction and manufacturing, making prices sensitive to shifts in wider economic sentiment. Concern over Chinese demand for base metals also continued to weigh on prices, said VTB Capital analyst Andrey Kryuchenkov. China's yuan fell to its lowest level against the U.S. dollar in more than a year, its fourth consecutive session of declines. Investors fear that a weaker yuan will crimp the appetite of Chinese manufacturers for copper, which is priced in dollars and becomes more expensive when the Chinese currency falls versus the greenback. Investors' confidence also remained dented by a spate of domestic bond defaults in China. On Tuesday it emerged that property developer Zhejiang Xingrun Real Estate Co., was unable to repay almost $600 million of bank loans. "There are still some concerns over further Chinese corporate defaults," said Mr. Kryuchenkov. China is the world's top consumer of base metals, accounting for around 40% of global copper demand. In other base metals Thursday, aluminum was down 1.5% at $1,713.25 a ton, zinc was down 1.3% at $1,954 a ton, nickel was 1.8% lower at $16,035 a ton, lead was 0.9% at $2,060 a ton and tin was down 0.5% at $23,100 a ton.

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