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Shanghai copper futures dipped on Wednesday on fears of slowing economic growth, and dealers expect a softer start to 2007 with prices possibly picking up in the second half.

Chinese copper futures prices were lower, with the most active February contract down half a percent percent, or 330 yuan, at 63,830 yuan a tonne at the close of trade.

"We read various assessments and the view seems to be lower prices in the first half of next year and higher in the second," a dealer in Singapore said.

"Of course there is always room for the unexpected -- mine accidents and so on, but I think the market will track that consensus. We are taking the Swiss approach -- a neutral view is the way to trade these markets."

Copper for delivery in three months on the London Metal Exchange was flat at $6,850 a tonne by 0627 GMT from the close in London on Monday. Turnover was 192 lots.

"We have seen that copper has been weak in China since October due to a decline in the country's apparent consumption. I don't expect the market to recover next year," said Li Ke, an analyst at Jiangsu Holly Futures Brokerage Co. Ltd. in Nanjing.

Cash copper in eastern China eased 235 yuan to trade between 65,430 yuan and 65,800 yuan.

China's economic growth is likely to slow slightly to between 9.6 and 10.1 percent in 2007, a think-tank said last week.

RATE CUT?

The Fed on Tuesday left U.S. rates unchanged for a fourth straight meeting, renewing a warning on inflation but nodding to mixed economic signals and a "substantial" housing slowdown.

The Fed departed from its last statement in October by noting the scope of the housing downturn and cross-currents in recent data -- shifts which financial markets took as hints the central bank's focus on inflation was softening.

A Reuters poll conducted on Tuesday after the Fed released its post-meeting statement showed that 13 out of 18 U.S. primary bond dealers believed the Fed was done raising rates, and that its next policy action will be to cut them.

A cut in U.S. interest rates would weigh on the dollar, making base metals more attractive for holders of other currencies, but a slowdown in U.S. growth could depress demand.

LME aluminium was down $4 at $2,806.

The most active February Shanghai aluminium futures contract gained one percent, rising 240 yuan to 20,560 yuan a tonne.

"Shanghai aluminium looks strong due to firm cash prices. For the January contract, we see it touching 21,000 yuan soon," Li said.

The January contract was at 20,870 yuan, versus 20,680 yuan on Tuesday.

Aluminium in eastern China for immediate delivery was quoted at 21,450 yuan to 21,470 yuan a tonne on Wednesday.

London zinc futures ticked $10 lower at $4,370.

Australia's Zinifex Ltd., which is merging its zinc assets with Belgium's Umicore, said its Century zinc mine in Australia had resumed operations and production losses were less than originally forecast.

Output at the mine was halted for four days due to mechanical problems with a concentrator, and would result in the loss of 5,600 tonnes of zinc production, down from an original estimate of 8,300 tonnes, it said.

Zinc prices have rallied 130 percent this year and touched a record $4,580 in November. The metal is also tipped as one of the strongest performers in 2007.

"We're not seeing a slowdown in demand for zinc, which is very strong," Australia & New Zealand Banking Corp. commodities strategist Andrew Harrington said. "The markets are very sensitive to the supply side."