NEW YORK/LONDON, March 16 (Reuters) - Copper prices added to gains late Tuesday as the dollar slid further against the euro after the U.S. Federal Reserve kept interest rates
unchanged, as expected, and repeated that rates would stay "exceptionally low" for an "extended period."
Copper for May delivery HGK0 on the New York Mercantile Exchange's COMEX division ended up 5.00 cents at $3.3650 per lb, after dealing in a session range between $3.31 and $3.3840. In after-hours trade, prices of the metal, used in power and construction, headed higher, holding up near the $3.37 level.
On the London Metal Exchange, benchmark copper for three-months delivery CMCU3 ended at $7,400 a tonne, up from $7,310 at the close on Monday. It also drifted higher, trading around $7,430, after the Fed statement.
The U.S. Federal Reserve held benchmark rates near zero on Tuesday and renewed a promise to keep them exceptionally low for an extended period while pointing to increased momentum in the economy's recovery.
The Fed said the labor market was "stabilizing," a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration
in the labor market was "abating."
"That's a little bit of a nod that economic activity is maybe getting a little bit better ... that's the main thing," said Donald Selkin, chief market strategist with National Securities Corp In New York.
"The market is kind of on its highs for the day, and that also is a sign of things maybe getting a bit better." Selkin also pointed to the dollar, which extended its losses against the euro in the aftermath of the Fed statement.A weaker dollar tends to make commodities priced in the American currency cheaper for holders of other currencies.
Looking ahead, the market was focused on second-quarter business, with all eyes on China, the world's top copper consumer. The second quarter of the year is traditionally the
strongest for metals demand. Analysts will be watching Chinese import data for signs
that the country was back in the market looking for material.
CHILE POWER CONCERNS
Also boosting sentiment in industrial metals were stocks of copper in London Metal Exchange warehouses, down more than 24,000 tonnes since March 1 at 528,050 tonnes -- the lowest since the middle of January.
Analysts said the market was also worried about supplies from Chile, where power supply could become a problem after a devastating earthquake hit the country in late February. That concern was reinforced by a magnitude 6.7 aftershock off Chile's coast on Monday.
"There are lingering worries about more power interruptions in Chile," said RBS metals analyst Stephen Briggs. "The market is concerned that power blackouts may be repeated, if you go on having them they (will) have some sort of effect."
But capping base metals prices so far this year were ongoing worries about a slow recovery in Western demand and expectations that China would tighten monetary policy to cool inflationary pressures created by red-hot growth.
Aluminum CMAL3 ended at $2,258 a tonne, up from $2,227, tin CMSN3 was untraded at the close, but bid at $17,550 a tonne, up from Monday's last bid at $17,410. Nickel's CMNI3 last bid was $21,875 a tonne, up from $21,500. Zinc CMZN3 touched $2,261, its lowest in more than a week. It closed at $2,307, up from Monday's last bid at $2,279.5. Battery material lead CMPB3 closed at $2,220, up from $2,203.