By Nick Trevethan SINGAPORE (Reuters) - Shanghai copper prices fell more than 1 percent on Wednesday, while London futures also lost nearly 1 percent, under pressure from a firm dollar, which also depressed oil and other commodity markets. The most active Shanghai August copper contract closed down 790 yuan, or 1.3 percent, at 59,770 yuan a tonne, while London Metal Exchange copper for delivery in three months lost $65 to $7,850 by 0700 GMT. "The dollar is the main influence on prices at the moment and it's making us a little bearish in the short term," a trader in Singapore said. "Adding to the downbeat mix, people are finding it increasingly hard to finance metal. Chinese bank lending seems to have dried up," he added. The dollar was little changed on Wednesday after its big gains in the previous session on Federal Reserve Chairman Ben Bernanke's explicit warning about the inflationary threat from a weak U.S. currency. The resurgence of the greenback also put pressure on oil, which fell 11 cents to $124.20 a barrel following a slide of more than $3 in the previous session. The gap in prices between the London and Shanghai copper markets widened to 4,236 yuan from 3,616 yuan on Tuesday, including Chinese value-added tax, well down from the record 6,549 yuan on April 18. Spot copper prices in Shanghai fell 375 yuan a tonne to a range between 61,150 yuan and 61,350 yuan. But with LME prices still some $600 above those in China, analysts did not expect a large surge in Chinese interest in the international market. "The arbitrage is narrowing, not because of strength in the domestic market, but because the LME is softening," John Kemp, a U.K.-based economist at RBS Sempra, said. "The Chinese have masses of copper and I don't feel they are about to go on an import splurge." For a graphic illustrating the relative performance of LME and Shanghai copper futures, please click on the following link: https://customers.reuters.com/d/graphics/LMEcu0608.gif Shanghai August zinc lost 145 yuan at the close to 16,645 yuan, approaching its contract low of 16,120 yuan touched in November 2007 but LME zinc rose $31 to $1,970. Shanghai aluminium fell 60 yuan to 18,765 yuan. LME metal fell $11 to $2,915. Power supply problems are seen supporting prices, but smelters may see some relief from rising costs after Chalco slashed spot alumina prices by 16.7 percent on Tuesday in its first such reduction since December. The company's shares fell 4.3 percent on Tuesday on the news. "Chalco's price cut is not a surprise as the market has been at 3,500 yuan for quite a while and the company is adjusting prices accordingly," said analyst Pang Ying at trading house Runtop. "The cut is likely to reduce some of the cost support built into the aluminium price," she added. In another development, Minara Resources Ltd, Australia's second-largest nickel producer, said on Wednesday its only source of gas for its Murrin Murrin mine had been temporarily suspended. Earlier forecasts by the company peg production from Murrin Murrin in a range of 34,000 to 38,000 tonnes of nickel in 2008, up as much as 38 percent on 2007. The London nickel price was flat at $22,300. | 
