Copper tumbled 3.5 percent on Wednesday after hitting a three-week high in the previous session, as supply fears were eased by a large rise in stocks and worries over Chinese demand pulled down prices of steel and iron ore. Other base metals also fell, while nickel was pushed lower after Philippine lawmakers blocked the appointment of an environment secretary who had called for mine closures.

"Once again copper is failing to hold (gains), with investors looking to renewed weakness in iron ore and steel and concerns that Chinese demand may not be as strong as expected," said Ole Hansen, head of commodities strategy at Saxo Bank. Benchmark copper on the London Metal Exchange closed down 3.5 percent at $5,600 a tonne, on course for its biggest fall since September 2015. On Tuesday it had touched $5,820, its highest since April 10.

On-warrant inventories available for delivery at LME-registered warehouses increased by 38,950 tonnes, or 32 percent, to 160,200 tonnes, the highest since mid-April. Funds' net long position rose to 55,899 lots on Friday from 52,365 lots the previous week, LME data showed.

CHINA: Major Chinese banks raised interest rates on housing loans, while Chinese stocks fell and a recovery in iron ore and steel futures faltered. The dollar rose, making metals more expensive for holders of other currencies, ahead of a US Federal Reserve statement later on Wednesday.

LME Nickel closed down 3 percent at $9,230 a tonne after lawmakers rejected the appointment of Regina Lopez as Philippine Environment Secretary. She had spearheaded a crackdown on the country's mines. Traders were watching a large position holding more than 90 percent of warrants. Cancelled warrants - material earmarked for delivery and so not available to the market - rose to more than half of total inventories.

Tin inventories at LME-approved warehouses fell to 2,265 tonnes, the lowest since 1989. Of these, 1,825 tonnes were on-warrant and available to the market. The premium, or backwardation, for cash lead over the three-month contract eased to $12 from $34.50 a tonne on Friday, while the premium for cash tin fell to $55.90 from $86.10 on Friday. Lower premiums signal greater availability of metal.

A global surplus will fall sharply this year due to an environmental crackdown in top producer China and move to a deficit in 2018, although the market has largely priced in the impact, a Reuters poll showed. Zinc finished down 3 percent at $2,575 a tonne, while lead ended 2.1 percent lower at $2,202 and tin slipped 0.3 percent to $19,895. Aluminium closed 0.3 percent down at $1,924.

Copyright Reuters, 2017