METALS-Copper steadies on China hopes, firm dollar weighs

Updates prices at 1615 GMT

By Eric Onstad

LONDON, Aug 30 (Reuters) - Copper prices were steady on Friday on optimism about more government support for the economy of top metals consumer China and as some investors bet that prices bottomed out earlier this month.

Three-month copper on the London Metal Exchange CMCU3 was little changed at $9,245 per ton by 1615 GMT after rising earlier in the session to $9,382.

Copper and other base metals pared gains after U.S. inflation data reinforced expectations that the Federal Reserve will likely cut interest rates by a smaller 25 basis points month.

That pushed the dollar index =USD higher, making commodities priced in the U.S. currency more expensive for buyers using other currencies. FRX/

Earlier in the session, prices perked up after a report said that China is considering allowing homeowners to refinance as much as $5.4 trillion in mortgages to reduce borrowing costs.

"This could help support consumer confidence, which has been on the weak side, so that could boost consumption among households," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

China has been stepping up its efforts to support its troubled property sector, a major source of demand for industrial metals.

Physical demand for copper in China has been lacklustre, but Shanghai Metals Market significant increases in China's copper wire and cable exports.

Some investors have taken heart from gains since copper hit a 4-1/2 month low on Aug. 5, having slid 22% from a May record peak of more than $11,100.

"It seems the tide has turned in the market, it has become a buy-on-dip market rather than a sell-into-strength market, which was the sentiment that prevailed for quite a few months," Hansen said.

LME aluminium CMAL3 slipped 0.4% to $2,447.50 a ton, CMNI3 fell 1.5% to $16,760 while zinc CMZN3 moved 0.6% higher to $2,895 and lead CMPB3 advanced 1.5% to $2,065. Tin CMSN3 was little changed at $32,350.

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(Reporting by Eric Onstad
Additional reporting by Siyi Liu in Beijing; Editing by Susan Fenton, Kirsten Donovan)

((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.))

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