Updates prices

By Julian Luk

LONDON, Aug 20 (Reuters) -Aluminium prices hit a five-week high on Tuesday as a shortage of alumina, the raw material for making the metal, in top producer China and a sliding dollar triggered fund buying.

Three-month aluminium on the London Metal Exchange CMAL3 earlier touched $2,506 per metric ton, the highest since July 11. It last traded up 1.6% at $2,483 a ton as at 1610 GMT.Momentum was partly fuelled by a break of the 50-day moving average on Monday.

China's alumina futures hit a near-three-month high on Tuesday, as growing demand and limited supply supported a rally of the key ingredient to make aluminium.

Contributing to higher alumina prices was a 30% drop in alumina inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) over the past three weeks, as profit related to making primary aluminium improved.

"For aluminium, it's the alumina shortages and China production story," an aluminium trader said. "The main macro theme is the dollar and what the Fed decides to do."

Expectations the Federal Reserve would cut interest rates at its meeting in September have pressured the U.S. currency, which when it falls makes dollar-priced metals cheaper for holders of other currencies.

Comments from Fed Chair Jerome Powell on Friday could provide clues to the speed of the U.S. rate cuts.

Dan Smith, analyst at Amalgamated Metal Trading said funds known as commodity trading advisors (CTAs) are starting to build long positions - bets on higher prices - in aluminium.

Supporting aluminium are China's surprising rise in imports despite robust domestic production, Smith said.

Focus is on a looming rail strike in Canada, the largest aluminium supplier to the United States, traders said. However, physical market aluminium premiums AUPc1 paid above the LME benchmark by U.S. buyers are yet to react.

Canada last year shipped 2.65 million tonnes of unwrought aluminium to the United States. This amounts to 63.7% of U.S. aluminium imports, according to data provider Trade Data Monitor.

LME copper CMCU3 was down 0.7% at $9,188.5 a ton, pressured by high inventory. Warehouse stockpiles rose to a five-year high of 320,050 tons, with LME data on Aug. 19 showing a major increase in stock in Taiwan. MCUSTX-TOTAL

Among other metals, LME nickel CMNI3 rose 1.5% to $16,915, zinc CMZN3 edged up 0.3% to $2,833.8, tin CMSN3 was down 1.5% at $32,090 and lead CMPB3 advanced 0.5% to $2,048.5.

Reporting by Julian Luk in London; Editing by Sharon Singleton, Shounak Dasgupta and Chris Reese

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