METALS-Base metals fall as dollar strengthens after rate cut

(Updates prices)

By Violet Li and Mei Mei Chu

SHANGHAI, Dec 19 (Reuters) - Base metal prices dropped following the Federal Reserve's suggestion of fewer U.S. interest rate reductions in the coming year, which in turn strengthened the dollar.

The three-month copper on the London Metal Exchange (LME) fell 0.9% to $8,903.5 per metric ton by 0732 GMT.

The dollar index hovered near a two-year peak, making it more expensive for other currency holders to buy greenback-priced commodities.

On Wednesday, the U.S. central bank cut interest rates by 25 basis points, with Fed Chair Jerome Powell stating that future cuts hinge on high inflation reduction, hinting at economic changes under the incoming Trump administration.

The most-traded January copper contract on the Shanghai Futures Exchange shed 0.2% to 73,850 yuan ($10,117.69) a ton by the close of the Asia afternoon trade session.

"Frequent rate cuts like this year are unlikely next year. When the Fed slows cuts, it tends to put a bit of pressure on riskier investments like commodities," a trader said.

LME aluminium slipped 0.3% to $2,520 a ton, zinc eased 0.5% to $2,968, lead dropped 0.4% to $1,974.5, tin slid 1.8% to $28,580 and nickel shed 0.8% to $15,385.

SHFE aluminium fell 0.3% to 19,850 yuan a ton, tin declined 2.1% to 240,650 yuan, nickel declined 1.1% to 122,830 yuan, zinc descended 0.9% to 25,200 yuan and lead dropped 1.2% to 17,400 yuan.

For the top stories in metals and other news, click or ($1 = 7.2991 Chinese yuan renminbi) (Reporting by Violet Li and Mei Mei Chu; Editing by Eileen Soreng and Sumana Nandy)