* Aluminium revists six-year low
* Federal Reserve starts two-day meeting (Updates with closing prices)
By Pratima Desai
LONDON, Oct 27 (Reuters) - Copper prices rose on Tuesday as expectations of a weaker dollar fuelled a short-covering rally, but gains are likely to be limited by technical levels and worries about slowing demand growth in top consumer China.
Benchmark copper on the London Metal Exchange closed 0.5 percent higher at $5,220 a tonne.
The U.S. Federal Reserve starts a two-day meeting on Tuesday. It is widely expected to leave interest rates on hold, a factor behind the dollar’s weakness this week, and possibly adopt a more dovish stance.
A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. buyers.
“U.S. interest rates and what that does to the dollar will move prices in the short term,” said Cantor Fitzgerald analyst Asa Bridle. “But it’s the softness on the demand side that will drive prices further out.”
China accounts for nearly half of global copper demand, which is estimated this year at about 23 million tonnes. Demand growth in the country has been slowing alongside the economy.
Funds still cutting short positions — bets on lower prices — and some reversing into longs is a plus for prices, traders said, adding that copper had hit a wall at $5,238, near the 23.6 percent Fibonacci retracement of the May to September drop.
“Above that there is the 200-day moving average, sitting near $5,350,” one trader said.
Three-month aluminium finished down 0.3 percent at$1,476 a tonne, matching a six-year low touched on Monday and representing a drop of more than 10 percent since Oct. 9.
“This ultimately reflects supply-side developments in China, which have generated renewed investor bearishness towards the metal,” Standard Chartered said in a note.
“Primary production growth in China has been robust so far in 2015, even as refined production growth rates for other base metals have tapered off due to margin pressures.”
Aluminium on the Shanghai Futures Exchange is hovering near record lows for the contract, but analysts say that prices will have to fall further before Chinese smelters will cut output and exports.
That is despite 90 percent of China’s huge aluminium smelter sector operating at a loss, according to consultancy AZ China.
Nickel closed 1 percent higher at $10,565 a tonne.
The global market balance in nickel is expected to move from surplus into a deficit of 49,000 tonnes next year, but prices are expected to receive only a modest boost, Macquarie senior consultant Jim Lennon said in a note.
“Against a background of over 850,000 tonnes in global stocks, of which 400,000 are surplus to normal needs, this does not suggest a massive price recovery is likely.”
Zinc ended unchanged at $1,740 a tonne, lead shed 0.4 percent to $1,749 and tin slipped 0.5 percent to $15,425.
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
Most active ShFE nickel
Three month LME tin
Most active ShFE tin (Additional reporting by Eric Onstad; Editing by David Evans and David Goodman)