METALS-Copper drops to two-week lows on Fed tapering caution

* US non-farm jobs data eyed this week for clues on economy

* Aluminium, lead, nickel drop to one-month lows

* European Central Bank news conference at 1330 GMT

(Updates with official prices)

By Harpreet Bhal

LONDON, Jan 9 (Reuters) - Copper prices fell to two-week lows on Thursday after upbeat jobs data increased expectations that the U.S. Federal Reserve could scale back its bond-buying stimulus programme more aggressively than anticipated.

Three-month copper on the London Metal Exchange CMCU3 traded at $7,263.50 a tonne in official rings, down from Wednesday's close of $7,344. It earlier fell to its lowest level since Dec. 23 at $7,237 a tonne.

A report from a major payrolls processor on Wednesday showed U.S. private employers had hired staff at the fastest pace in 13 months in December News Search ID:nZON222O00 , boosting expectations that Friday's crucial U.S. non-farm jobs figures could also top forecasts later this week.

"If the U.S. non-farm payrolls data does beat expectations, then there is a strong possibility that the new regime in the Federal Reserve bank could take more aggressive steps towards tapering, which could put more pressure on copper," said Naeem Aslam, chief market analyst at Ava Trade.

Minutes from the Federal Reserve's Dec. 17-18 meeting showed the central bank wanted to err on the side of caution. News Search ID:nL2N0KI1V9

Market participants, however, have begun to price in tighter policy sooner rather than later, with the tapering process expected to be completed by the end of this year.

Adding to the weak copper market were signs of limited restocking demand from China as its economy cools.

China is the world's largest consumer of copper, accounting for as much as 40 percent of global refined demand.

"The dollar will continue to strengthen because of U.S tapering, and China's economic growth is slowing down," said Helen Lau, a senior commodities analyst with UOB Kay Hian in Hong Kong.

"I'm a bear on copper prices. I think $7,000 is a more sustainable level," she said.

The dollar traded close to seven-week highs against a basket of major currencies following the U.S. private-sector jobs report. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies. Href="NewsSearch">FRX/

Market participants are likely to closely monitor a news conference by the European Central Bank (ECB) at 1330 GMT for policy direction, following the central bank's decision to keep interest rates unchanged at a record low. News Search ID:nF9N0GH022

In other metals, tin CMSN3 fell ahead of Indonesia's ban on unprocessed mineral ore exports from Jan. 12.

It traded at $21,795 a tonne in official rings, down from a close of $21,995 on Wednesday.

"Tin is turning out to be the biggest loser - no doubt partly because of the ongoing uncertainty over the ore export ban in Indonesia," Commerzbank analysts said in a note.

Indonesia's mining ministry sought to ease a controversial mineral export ban before its Sunday deadline but still looked set to prohibit more than $2 billion worth of annual nickel ore and bauxite shipments.

Under the proposed regulations, miners such as U.S. giants Freeport-McMoRan Copper & Gold FCX.N and Newmont Mining Corp

NEM.N would still be allowed to export copper, manganese, lead, zinc and iron ore concentrate until 2017. News Search ID:nL3N0KI1L6

Lead CMPB3 , untraded in rings, was bid at $2,118, from a close of $2,139 on Wednesday. It earlier hit its lowest level since early December at $2,110 a tonne.

Aluminium CMAL3 , also untraded in rings, was bid at $1,757 from $1,777, having earlier hit its lowest since early December at $1,753.

Nickel CMNI3 , untraded in rings, was bid at $13,420 from a close of $13,500. It earlier hit its lowest level since early December.

Zinc CMZN3 traded at $2,017, down from a close of $2,029.

PRICES

Three month LME copper CMCU3

Most active ShFE copper SCFcv1

Three month LME aluminium CMAL3

Most active ShFE aluminium SAFcv1

Three month LME zinc CMZN3

Most active ShFE zinc SZNcv1

Three month LME lead CMPB3

Most active ShFE lead SPBcv1

Three month LME nickel CMNI3

Three month LME tin CMSN3

(Additional reporting by Melanie Burton in Singapore; editing by Jane Baird)

((harpreet.bhal@thomsonreuters.com)(+44)(0)(207 542 4533)(Reuters Messaging: harpreet.bhal.thomsonreuters.com@reuters.net))

 
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