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Friday March 23, 4:12 AM LME prices rally on Fed statement and China demand LONDON, March 22 (Reuters) - Copper, nickel and zinc prices rallied on Thursday on data suggesting strong Chinese demand and a change to more neutral language in the Federal Reserve's latest policy communique on U.S. interest-rates. Copper for three-month delivery on the London Metal Exchange surged to $6,784.50 a tonne, its highest since Dec. 14, before closing at $6,730, up 1.8 percent from Wednesday. Nickel gained $1,400 or 3.2 percent to close at $45,300 and zinc rose 2.4 percent to $3,195. Prices were supported after the U.S. Federal Reserve held interest rates steady late on Wednesday and issued a statement that contained no explicit reference to the possibility of taking rates higher. The statement referred to "future policy adjustments," dropping the phrase "additional firming" from the Fed's last statement. Analysts viewed the change as a more neutral stance that could mean higher or lower interest rates. "There is a sense that the U.S. authorities are closer to lowering interest rates and ... the Fed will be able to ensure that economic slowdown in the US will be contained," analyst Stephen Briggs at Societe Generale said. Copper for May delivery finished at its highest closing level since Dec. 13. It advanced 5.40 cents to end at $3.0730 a lb on the New York Mercantile Exchange's COMEX division. It rallied as high as $3.0950 its highest since Dec. 14. European shares firmed after U.S. and Asian stock markets rallied on prospects of rate cuts in the U.S., with major mining companies Antofagasta, Lonmin and Rio Tinto rising over 2 percent on the London Stock Exchange. Traders highlighted reports on Chinese copper imports also supported the upward trend. "Copper has resumed its uptrend. The market took the Chinese import data in its stride," a trader on the LME floor said. The positive trend in China's refined copper imports reflected an end to the period of de-stocking of copper, a Barclays Capital report said. China's refined copper net imports in February 2007 came in at an all-time high at around 147,700 tonnes, the report said. Copper stocks in London Metal Exchange-registered warehouses fell 1,525 tonnes to 187,775 on Thursday. Stocks have fallen by around 20,000 tonnes since the start of March. "Copper inventories continue to ease off ... and that is supporting the market. ... People are primarily focussing on short term tightness," analyst Andrew Keen at Sanford C. Bernstein said. Also reflecting tight supplies, the premium for cash copper over three-months futures stood at around $70/75, slightly off from Tuesday when it went over $81. But the cash price was at a discount from November until earlier in the month. NICKEL UP Nickel prices have risen more than 30 percent since the end of last year on demand from stainless steel makers and critically low stocks. "The nickel market is really in volatile territory at the moment," Keen said. "These levels are going to cause problems for demand. But the market is still tight, there is not enough fresh production to ease it off, these kind of prices are not sustainable in the longer term." Stocks of nickel in LME warehouses rose 12 tonnes to 4,314, of which only 2,922 are on warrant and available to market -- less than a day's global consumption. China's demand for nickel may rise 20 percent this year, a senior analyst at a state-owned research group said on Thursday. Aluminium was up to $2,778/2,780 from $2,750/2,755, tin was quoted at $14,000/14,050 from $13,850/13,900 and lead gained to $1,920/1,930 from $1,915/1,920. Metal Prices at 1715 GMT Metal Last Net Change Percent Move LME Cu 6730.00 120.00 +1.82 SHFE Cu* 61010.00 680.00 +1.13 LME Alum 2778.00 28.00 +1.00 SHFE Alu* 19560.00 -20.00 -0.10 COMEX Cu** 307.00 5.10 +1.69 LME Zinc 3190.00 70.00 +2.24 LME Nickel 45200.00 1300.00 +2.96 LME Lead 1920.00 5.00 +0.2 LME Tin 14000.00 150.00 +1.07 Change so far in 2007 Metal Latest bid End prev year Percent Move LME Cu 6730.00 6330.00 +6.32 SHFE Cu* 61010.00 60080.00 +1.55 LME Alum 2782.00 2805.00 -0.82 SHFE Alu* 19560.00 20550.00 -4.82 COMEX Cu** 307.00 287.10 +6.93 LME Zinc 3190.00 4230.00 -24.59 LME Nickel 45200.00 33325.00 +35.63 LME Lead 1920.00 1670.00 +14.97 LME Tin 14000.00 11510.00 +21.63 * 3rd contract months for SHFE copper and aluminium ** 1st contract month for COMEX copper (Additional reporting by Anna Stablum in London and Carole Vaporean in New York)