* BHP Billiton copper production up 6 pct on year
* Nickel at near nine-week high
* U.S. nonfarm payrolls rise less than expected
By Harpreet Bhal
LONDON, Oct 22 (Reuters) - Copper rose on Tuesday as the dollar fell and after the first U.S. jobs report in nearly two months suggested the economy had lost steam, supporting expectations that the Federal Reserve will delay a decision to taper its bond-buying programme.
Nonfarm payrolls increased by 148,000 last month, the U.S. Labor Department said, less than economists' forecasts of 180,000 jobs. The report was released more than two weeks later than originally scheduled because of the partial shutdown of the federal government.
Benchmark copper on the London Metal Exchange rose to a session high of $7,350 a tonne, before trimming gains to closed at $7,333 from a close of $7,245 on Monday.
Fed officials are likely to hold off any decision on scaling back the U.S. central bank's bond buying until the extent of the economic damage from a budget fight and the shutdown is clearer.
"It will certainly take more than one report for the Fed to trigger any kind of unwinding plan. So it is safe to say that the tapering plan may not see daylight till the end of this year or early next year," said Naeem Aslam, chief market analyst at Ava Trade.
The dollar fell across the board after the disappointing jobs data. This helped copper because a weaker U.S. currency makes it less expensive for foreign investors to buy dollar-priced commodities, thus supporting prices.
But gains were partly checked by concerns about the outlook for demand from top consumer China, as well as expectations of growing supply of the metal, used in electrical wiring.
China's refined copper production rose 10.6 percent in September from the previous month, figures from the National Bureau of Statistics showed.
"China's copper output increased in September, with smelters raising their operational rates as the weather cooled down, and because TC/RCs (processing fees) were very high," said analyst Chunlan Li of consultancy CRU in Beijing.
"Copper production will continue to grow, but it's hard to say if it will grow at the same pace ... Even though concentrate supply is increasing, it takes time for new refinery capacity to ramp up production," she added.
Highlighting the outlook for increased supply, BHP Billiton , the world's biggest mining company, said it produced 6 percent more copper in the quarter to end-September than in the year-earlier period.
Nickel rose to a near nine-week high at $14,880, helped by a proposed ban by Indonesia on nickel ore exports. Nickel closed at $14,850 per tonne from a close of $14,365 on Monday.
Citi said in a research note that nickel ore producers appeared to be taking seriously prospects of an Indonesian ore export ban from January next year, by raising the metal content in their ore to maximise revenue.
LME zinc closed at $1,962 from $1,940 at the close on Monday, lead at $2,202.50 from $2,165. Tin, untraded at the close, was bid at $23,200 from $23,005, and aluminium, also untraded, was bid at $1,879 from $1,856.
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