METALS-London copper hits three-week low on U.S. deadlock
* Fed September minutes due 1800 GMT
* Obama to meet House of Representatives Democrats at 2030 GMT
* Yunnan Tin Co chairman charged with bribery by China
By Freya Berry
LONDON, Oct 9 (Reuters) - Copper dropped to its lowest in three weeks on Wednesday as the U.S. fiscal deadlock eroded appetite for risk-associated assets, though the dollar found some relief in Janet Yellen's nomination as head of the U.S. Federal Reserve.
Benchmark three-month copper closed ring trading down 1.9 percent at $7,100, with European shares hitting a one-month low while the dollar was up 0.4 percent against a basket of major currencies.
President Barack Obama refused to give ground in the fiscal confrontation with Republicans on Tuesday, saying he would negotiate on budget issues only if they agree to re-open the federal government and raise the debt limit with no conditions.
"Markets are beginning to get increasingly concerned about the issues on Capitol Hill, and that the budget is yet to be agreed," Fairfax analyst John Meyer said.
"Any form of crisis generally causes everything to pull back. Metals are often used as a short-term, as well as longer-term, store of value, and copper is increasingly used in this way, so (investors) tend to pull back in order to meet margin calls elsewhere."
Investors also awaited the release of the Fed's September minutes at 1800 GMT, which many will scan for reasons behind the central bank's decision not to start trimming its stimulus last month.
The dollar recovered slightly on the news that President Obama has tapped dovish Vice Chairwoman Yellen as Ben Bernanke's successor in the top job at the Federal Reserve, though the debt ceiling continues to cast a long shadow.
The dollar's gains contributed to the lack of support for copper, since a stronger greenback makes it more expensive for foreign buyers with other currencies to purchase the dollar-priced red metal.
The president hinted on Tuesday that he might accept a short-term increase in the debt ceiling to avoid default and a White House representative said he had invited Democrats from the House of Representatives to meet for talks on Wednesday afternoon.
Yet still the market confusion lingered.
"This (short-term increase to the debt ceiling) is not something that the market will like, because it will increase uncertainty," said Gianclaudio Torlizzi, partner at T-Commodity.
Aluminium closed trading down 0.4 percent at $1,858 a tonne. Lead finished with a loss of 0.9 percent at $2,075 and zinc closed flat at $1,886. Nickel finished down 1.7 percent at $13,660 a tonne.
Tin closed down 0.6 percent at $23,400 a tonne but remained near a seven-month high, supported by a Friday spike on worries over supplies from top exporter Indonesia.
The chairman of Yunnan Tin Co, the world's largest tin producer, was earlier arrested by Chinese authorities and charged with accepting bribes in the latest example of the country's recent anti-corruption drive.
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