LONDON, Sept 16 (Reuters) - Copper edged up on Wednesday as traders eyed an equity rally in top consumer China and tight supplies, though most opted to bide their time ahead of a possible U.S. interest rate rise this week.
The dollar rose versus a currency basket after upbeat consumer spending data kept alive expectations the U.S. Federal Reserve would raise interest rates.
A strong dollar makes dollar-priced metals costly for non-U.S. investors.
But many investors still expect the Fed to hold fire at a two-day meeting that starts later on Wednesday. Reflecting divergent market views, European and Asian shares rose ahead of the Fed decision. In China, equities posted their biggest gains in three weeks, helped by a spike in late trade.
"We think the fourth-quarter numbers (from) China will pick up as a result of the stimulus we've seen. We're coming to the end of a seasonal lull and it (stimulus) takes time ... to feed through to real demand for metals," said Caroline Bain, senior commodities economist at Capital Economics.
"Whether the Fed hikes tomorrow or not it's hard to see a massive reaction either way. We've had so much warning this year that the big move in the dollar could be behind us," she added.
Three-month copper on the London Metal Exchange rose 0.6 percent to $5,377 a tonne by 1117 GMT. Prices have stalled since hitting seven-week highs last week, but they are up 10 percent since hitting six-year lows last month.
Helping the metal, data showed LME copper stocks in LME warehouses fell to 334,850 tonnes, their lowest in more than two months, with 21 percent of that metal unavailable because it has been booked for delivery.
Cash copper is also trading at a premium to the three-month price CMCU0-3, indicating tight supplies.
The Federal Reserve will give a statement on Thursday on whether it will raise rates. U.S. consumer spending grew at a fairly healthy pace over the past two months, pointing to underlying strength in domestic demand that could strengthen the case for a hike.
Lead rose 1.7 percent to $1,715, trading at near parity with zinc, which was flat at $1,738. LME lead stocks MPBSTX-TOTAL are down 24 percent since late July, while zinc stocks are up 40 percent over the same period MZNSTX-TOTAL.
Huge zinc deliveries into New Orleans, most likely against short positions as the September contract expired, have eased nearby spread tightness.
"We have noted CTA-type buying of lead and selling of zinc this morning," said broker Marex Spectron in a note.
LME nickel rose 1.8 percent to $10,275, though the metal's fundamentals remain lacklustre as slow demand improvement in top consumer China feeds a feeble downward trend in LME inventories MNISTX-TOTAL.
