NEW YORK, March 15 (Reuters) - Copper fell on Tuesday, but trimmed losses late after the U.S. Federal Reserve said the economic recovery is "on a firmer footing" and conditions in the labor market "appear to be improving gradually."
The Fed kept interest rates unchanged and maintained its its program of extraordinary monetary support. [ID:nN15230117]
Copper prices on the London Metal Exchange (LME) have fallen more than $1,000 a tonne from the record $10,190, hit last month.
"I guess it stops the bleeding for copper for the time being," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
"We're seeing equity markets perk up after the Fed on the upbeat assessment of the economy, but we're all watching these headlines right now."
Despite the Fed's more upbeat economic assessment, markets would stay focused on Japan's nuclear power crisis and the impact it could have on the global economy.
In after-hours business, LME three-month copper CMCU3 was trading at $9,136 per tonne by 3:17 p.m. EST (1917 GMT). It closed kerb trading down $77 at $9,118.
COMEX May copper HGK1 slipped 4.95 cents per lb to settle at $4.1370, then bounced to trade at $4.1775.
Copper prices have held up better than most commodity markets as investors remained optimistic about longer-term demand trends.
"The big bullish catalyst in the long-term is that there is going to be a lot of infrastructure to be rebuilt in Japan," said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.
"You're basically taking production which you can get in the form of economic growth and it's going back into infrastructure building."
But copper remained vulnerable to uncertainty surrounding Japan's nuclear power crisis.
"The latest news about radiation leaks in Japan is very worrying and markets hate worries. They hate geopolitical worries, earthquakes, tsunami and now this is yet another level of uncertainty," said Credit Agricole analyst Robin Bhar.
"Further losses are likely in the next 24 hours because people are retreating from positions. It just all looks very grim at the moment."
From here on out, Pacific Wealth's McGillivray said the trade will be keeping a close eye on the the Reuters-Jefferies CRB index .CRB, as it hugs its 50-day simple moving average.
"On the institutional side, the big index funds have been eye-balling the CRB price index .... flirting with the 50-day moving average.
"If we get some stabilization in the more traditional assets, be it the equity indexes, I think you'll get people reloading back in and using this as a buying opportunity in those commodities that could potentially be used for infrastructure rebuilding," he said.
Aluminium warehouse stocks rose to 4,624,925 tonnes, latest data showed, in sight of a record high of 4,640,750 tonnes hit on Jan. 20 2010.
As stockpiles have grown, the market's price structure has moved further into contango MAL0-3 -- a discount for cash material over the three-month contract -- of around $34 a tonne versus levels of about $20 in early February.
In late January, worries about market tightness narrowed the contango to around $7.
But the rising inventories do not necessarily mean that demand for the metal is waning.
"I think material is being moved on-exchange due to the ending of some warehousing funding deals," Daniel Major, an analyst at RBS, said, adding he expects demand for aluminium to increase in 2011 and thereafter.
Aluminium CMAL3 was untraded at the close, but was last bid at $2,510 from $2,555 at the close on Monday.
Metal Prices at 1925 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct