* Speculators buy back short positions
* Dollar weakens after China says to exit forex intervention
* Lead, zinc global markets tightening
By Silvia Antonioli and Eric Onstad
LONDON, Nov 19 (Reuters) - Copper bounced on Tuesday from its lowest levels in more than three months as funds bought back short positions, the dollar weakened slightly and China detailed more of its reforms.
Copper was unlikely to rise much further, however, because of uncertainty about the U.S. central bank’s plans for its stimulus programme, analysts said.
“There’s been some short covering because the market held above support at $6,900 (a tonne),” said analyst Andrey Kryuchenkov at VTB Capital. “But I don’t think this (move higher) will last.”
Three-month copper on the London Metal Exchange rebounded from a session low of $6,910 a tonne, its weakest since Aug. 7, touching a intra-day peak of $7,005. It closed virtually flat, down 0.1 percent at $6,970.
At the lows, copper had shed about 6 percent over the past four weeks after breaking out of its $300 range.
Investors sold copper on prospects of less liquidity in the markets if the Fed tapers its commodity-friendly monetary stimulus programme and on expectations of more supply next year.
“The small rebound from the new lows this morning was due to opportunistic buying, but uncertainty over stimulus tapering is still dominating headlines and it will still happen in 2014,” Kryuchenkov added.
Top Fed officials from opposite sides of the policy spectrum pointed to improvement in the U.S. economy on Monday, adding more weight to the notion that the central bank is moving closer to reducing the pace of its $85 billion-a-month asset purchases.
Scaling down the stimulus programme would reduce liquidity available to businesses and to commodity investors, eroding price support for metals.
Helping support metals was a slightly softer dollar after the Chinese central bank said it would gradually withdraw from regular intervention in the foreign exchange market.
A weaker dollar makes metals priced in the U.S. currency cheaper for buyers outside the United States.
Copper is also under pressure from the prospect of rising supply, with a top miner having agreed a 31 percent increase to processing fees for 2014. Miners tend to pay higher processing fees when there is more supply.
“We continue to see supply outstripping demand over the next 24 months, which will mean any price rallies for copper will be short-lived,” Deutsche Bank said in a note.
In other metals, the global lead market was in deficit by 46,000 tonnes in the first nine months of the year, compared with a surplus of 80,000 a year earlier, the Lisbon-based International Lead and Zinc Study Group (ILZSG) said.
ILZSG data also showed the global zinc market surplus had shrunk by more than half year on year to 38,000 tonnes.
“In both cases, this is attributable to significantly increased demand, which clearly outstripped the growth in supply. The situation on both markets is likely to tighten further as a number of larger mines reach their end-of-life over the next few years and insufficient replacements are available,” Commerzbank said in a note.
Zinc, used to galvanise steel, closed up 0.6 percent to $1,896 a tonne, battery material lead added 0.5 percent to end at $2,092, while tin gained 0.2 percent to $22,800.
Nickel finished 0.3 percent higher at $13,630 a tonne.
“Nickel tested its early October lows, but has since stabilised and is looking to be forming a floor once again,” Leon Westgate at Standard Bank said in a note.
Aluminium failed to trade in closing activity and was last bid at $1,793 a tonne, up 0.56 percent.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin