OREANDA-NEWS. March 11, 2015. Copper fell on Tuesday as the dollar hit multi-year highs against the euro and yen and as data showed increased factory sector deflation in top copper consumer China.

The dollar was driven up by speculation that the Federal Reserve will start lifting interest rates from mid-year after strong US jobs data on Friday.

A strong dollar makes dollar-priced metals costlier for non-US investors.

In China, consumer prices rose in February compared with the same month last year, but producer prices continued to slide, underscoring deepening weakness in the economy.

Three-month copper on the London Metal Exchange sagged by 2.3 percent to \\$5,735 a tonne by 1126 GMT, after a 2.2 percent gain in the previous session.

Copper has been recovering from 5-1/2 year lows touched in January, after which bullish investors came in betting on a price recovery ahead of China's seasonally strong second quarter.

"At these sort of price levels copper might well have seen the lows.

There's issues making Chinese consumers live hand to mouth but one has to fall back to the fact that 7 percent growth in the world's No. 2 economy is still meaningful," said William Adams, head of research at Fast Markets. Investment by the State Grid Corporation of China is expected to grow 9 percent this year.

Demand from the power sector accounted for nearly half of China's estimated 8.7 million tonnes of refined copper consumption last year. "For prices, a key catalyst is macro sentiment, which is bearish on China and Europe right now.

We need to see an improvement in one of those for prices to move higher," said Ivan Szpakowski of Citi in Hong Kong. Elsewhere, a severe drought in top metals miner Chile is fanning supply risks for copper.

The metal is still expected to move into surplus this year, though analysts have been trimming back their surplus forecasts.

In other metals, zinc fell 1 percent to \\$2,022 a tonne.

Japan's biggest zinc smelter, Mitsui Mining and Smelting Co Ltd, expects the zinc price to recover towards \\$2,300 a tonne in the second half because of a likely deficit in the global refined zinc market through to 2017.

Aluminium fell 0.9 percent to \\$1,764 a tonne - its lowest level since mid-January.

"Physical (aluminium) premiums have fallen in Japan, they're under pressure in Europe and the US so consumers are happy to sit on sidelines for the moment until premiums stabilise," said Adams.

Tin fell 1.2 percent to \\$17,975 a tonne while nickel slid 2.7 percent to \\$14,140 a tonne.

Refined tin shipments from top exporter Indonesia fell 12 percent to 5,986.43 tonnes in February from the previous month, its lowest level since November, a trade ministry official said on Tuesday.