METALS-LME copper falls for 2nd day as US stimulus hopes wane

* Loss seen capped as focus turns to mending US economy
    * Copper stays well above 200-moving day average
    * Fed less inclined to more stimulus measures
    * Coming Up: U.S. ADP employment report; 1215 GMT

 (Adds details, updates prices) 
    By Manolo Serapio Jr 
    SINGAPORE, April 4 (Reuters) - London copper fell for a
second day on Wednesday, pulling further away from near
two-month highs, as fading hopes for more stimulus measures from
the U.S. Federal Reserve cut investors' appetite for risky
assets. 
    A recovering U.S. economy prompted the Fed's softer stance
towards another round of quantitative easing, also called QE3,
but analysts say the decline in commodity and equity prices
could be short-lived as investors shift their focus to a
brighter outlook for the world's top economy. 
    "This is just a general readjustment of expectations and if
the U.S. economic recovery happens to be more sustainable,
prices of riskier assets would go up again," said Thomas Lam,
economist at DMG & Partners Securities. 
    And with still two of the policy-setting Federal Open Market
Committee's 10 voting members seeing the case for additional
monetary stimulus, Lam said "it didn't mean the Fed slammed the
door on QE3."  
    "They're simply saying it will be largely data-dependent." 
    Three-month copper on the London Metal Exchange 
slipped 0.9 percent to $8,537 a tonne by 0707 GMT. Despite the
drop, the price remained well above the 200-day moving average
of $8,318. 
    "This move is just Fed-related. That's what markets do now.
The correlation is one. If everything else sells off, copper
does too," said a Singapore-based trader.  
    Chinese markets stayed shut for a public holiday, keeping a
lid on volumes. Shanghai reopens on Thursday. 
    There was some copper buying at levels just above $8,500
from a Chinese name despite holidays in China and Hong Kong, a
Singapore-based trader said, helping limit losses.        
    Copper rose as high as $8,702.75 on Tuesday, its loftiest
since Feb. 10, on encouraging U.S. and Chinese factory data. 
     
    BIGGER PICTURE 
    There was more evidence of a gradually recovering U.S.
economy on Tuesday as data showed new orders for U.S. factory
goods bounced back 1.3 percent in February, albeit a tad off
market expectations. 
    Analysts expect the momentum to be sustained, seeing a
fourth month of solid job growth in the United States in March
when the nonfarm payrolls data is released on Friday.
  
    Tuesday's price fall came after a further build in LME
warehouse copper stockpiles, which hit 260,650 tonnes, the
highest level in two weeks, after a sustained decline since last
September. 
    But analysts say an improving global economy should
eventually boost the demand outlook for industrial metals. 
    "We think the bigger picture with stabilizing growth is more
important. Inventories are unlikely to climb much higher. As a
result, we think price risks in the sector are skewed to the
upside," Credit Suisse said in a note. 
    But a continually backwardated LME cash-to-three month
copper spread MCU0-3, with the cash premium rising slightly to
$22.50 from $20 late last week, still points to tightness in
nearby supplies. 
    There was little market reaction to Indonesia's plans to
impose a 25 percent export tax on base metals as well as coal
this year, hoping to boost domestic investment and take a bigger
slice of mining profits.  
    Jakarta said on Wednesday the tax is meant to curb a
production boom as miners are trying to overexploit resources
before a 2014 law that will require raw ore to be upgraded.
  
    In response, Freeport McMoRan Copper & Gold, which
runs the huge Grasberg copper and gold mine on Papua island,
said it is confident the Indonesian government will honour a
contract of work signed with the miner.  
    Aluminium outperformed other base metals, dropping a
modest 0.6 percent to $2,112.75, supported by a rise in U.S. car
sales last month. 
       
  Base metals prices at 0707 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8537.00    -78.00     -0.91     12.33
  HG COPPER MAY2     387.90     -4.00     -1.02     12.89
  LME Alum          2112.75    -12.25     -0.58      4.59
  LME Zinc          2000.00    -20.00     -0.99      8.40
  LME Nickel       17975.00   -475.00     -2.57     -3.93
  LME Lead          2045.25    -24.75     -1.20      0.50
  LME Tin          22800.00   -225.00     -0.98     18.75