By Sarah Marsh and Pratima Desai
LONDON (Reuters) - Copper prices slipped on Wednesday as investors took profits ahead of the U.S Federal Reserve's decision on interest rates and comments on prospects for the economy.
But aluminium bucked the trend, hitting a six-month peak of $2,715 as investors piled in on expectations of higher prices as power shortages in South Africa and China tightened supplies.
Copper for delivery in three months on the London Metal Exchange was at $7225/40 a tonne by 1116 GMT, down from $7291 at the close on Tuesday when it hit a two-week high.
The metal, a key raw material for the power and construction industries, was boosted on Tuesday by strong durable goods data from the United States.
The U.S. central bank is widely expected to cut interest rates by a quarter or half a percentage point, though some are talking about 75 basis points.
"We expect a knee-jerk reaction and some euphoria as we've seen with previous cuts," said Robin Bhar, analyst at UBS.
"But we don't think it will last long and prices will maybe come back down again."
Last week the Federal Reserve slashed rates by 75 basis points to 3.5 percent to help boost confidence.
Investors also will scrutinise the Fed's comments on the outlook for the economic growth for clues on the possibility of further rate cuts to bolster economic activity.
Before that markets will see fourth quarter gross domestic product data from the United States, which could hit or help confidence in equity and commodity markets.
ALUMINIUM EXTENDS GAINS
Aluminium, used widely in the power, packaging and construction industries, was up at $2,675/80 a tonne, against its previous close of $2,650. Aluminium has gained by more than 5 percent since Friday.
The recent price rally was triggered by power shortages in China and South Africa and momentum built up as speculators including hedge funds seeing value bought aluminium futures.
"Aluminium is benefitting, more than anything else, from strong speculative interest," a London-based analyst said.
The metal has mostly traded in a range between $2,600 and $2,400 since last August. If it manages to sustain current levels then a push higher towards the key $3,000 a tonne level is on the cards, analysts said.
Production of lead, zinc, antimony and ferroalloys has also been hit by power cuts and chaotic weather in China.
China's top zinc producer Zhuye shut all production plants on Tuesday night amid a blackout. The firm runs a 400,000 tonne-a-year zinc facility and a 100,000 tonne-a-year lead smelter.
Zinc was at $2,350/70 a tonne from $2,380 on Tuesday, lead at $2,735/55 from $2,770, tin at $16,700/900 from $16,900 and nickel at $27,800/28,000 from $27,750.
