METALS-Most base metals rise on expectation of US rate cut

(Updates prices, adds quotes) By Mai Nguyen Sept 16 (Reuters) - Most nonferrous metals rose on Monday, buoyed by a softer dollar amid expectations of an interest rate cut by the U.S. Federal Reserve this week. Three-month aluminium on the London Metal Exchange (LME) CMAL3 was 0.9% higher at $2,492 a metric ton by 0804 GMT. Earlier in the session, the contract hit the highest level since Aug. 28 at $2,506.50. Trading volume was tepid as markets in China are closed until Wednesday for a public holiday. The Fed is almost as likely to deliver an outsized 50 basis point interest-rate cut as a more usual 25 bp cut, trading in rate-futures contracts suggests, as financial markets priced in a bigger chance that the Fed will move more aggressively. A rate cut would support economic growth and physical metals demand, as well as putting pressure on the dollar. A metals trader said prices were being driven by the U.S. dollar, which when it softens makes greenback-priced metals cheaper for holders of other currencies. "The U.S. dollar is being pushed weaker as we get closer to the Fed meeting," the trader said. The dollar index .DXY eased to hover near its lowest since Sept. 5. LME zinc CMZN3 reversed an earlier 0.9% climb to $2,930, its highest since Aug. 30, to stand 0.1% lower at $2,901. Lead CMPB3 edged up 0.1% to $2,044.50, tin CMSN3 was 0.2% higher at $31,870 and nickel CMNI3 rose 0.6% to $16,040. Weekend data showed industrial output growth in top metals consumer China slowed to a five-month low in August, while retail sales and new home prices weakened further. LME copper CMCU3 fell 0.7% to $9,246.50 a ton. The sluggish Chinese data, however, bolstered the case for aggressive stimulus to shore up the world's second-biggest economy and help the country achieve its annual growth target pushed by President Xi Jinping. For the top stories in metals and other news, click TOP/MTL or MET/L (Reporting by Mai Nguyen in Hanoi; Editing by Subhranshu Sahu, Kirsten Donovan) (([email protected]; Reuters Messaging: [email protected])) (( For related news and prices, click on the codes in brackets: LME price overview RING= COMEX copper futures 0#HG: All metals news MTL All commodities news C Foreign exchange rates FX= SPEED GUIDES LME/INDEX ))