Copper higher ahead of Fed statement

Trade was cautious ahead of a policy statement by the US Federal Open Market Committee, which was due out after the LME close.

 At the PM kerb close on Wednesday, LME three-month copper was up 1.6 per cent at $US7,183 a metric ton. Aluminium was 0.4 per cent higher at $US1,784.40 a ton.

Base metal prices found support from the Chinese market, where local traders stocked up on industrial metals ahead of the Mid-Autumn Festival later this week, said analysts and brokers. Markets in China - the world's top base metal consumer - will be closed on Thursday and Friday.

Other investors awaited the conclusion of a two-day FOMC meeting - which issued its policy statement at 1800 GMT (0400 Thursday AEST).

Markets had expected the FOMC to withdraw some of the $US85 billion-a-month it has been spending to buy bonds, known as quantitative easing. But, after the LME close, the FOMC surprised by announcing it was keeping its stimulus measures in place.

Since base metals have a range of everyday uses, from smartphones to household plumbing, efforts to spur economic growth tend to prop up demand.

"For the most part, participants are bracing for a degree of tapering, although the game now seems to have shifted towards guessing the exact amount," said INTL FCStone analyst Edward Meir.

Base metals also drew support from some solid US housing data on Wednesday.

Housing starts rose 0.9 per cent in August from July to a seasonally-adjusted annual rate of 891,000, the US Commerce Department said. That was less than the 915,000 forecast by economists.

August home starts were driven by a seven per cent increase in single-family homes, considered a more reliable barometer of the sector's health.

"The small rise in housing starts in August is not as disappointing as it appears," said Capital Economics analyst Paul Diggle. - news.com.au