Copper futures have settled lower on the London Metal Exchange (LME) after a US Federal Reserve official said the central bank could begin to scale back its vast bond purchasing program next month.

At the PM kerb close on Friday, LME three-month copper was down 0.7 per cent at $US7,280 a ton. The red metal rallied 3.7 per cent over Wednesday and Thursday's sessions following the Federal Open Market Committee's (FOMC) decision to stand pat on its $US85 billion-a-month bond-buying program.

Since copper is used widely in manufacturing and construction, the Fed's efforts to stimulate economic growth have propped up demand for the metal in recent years.

Copper's rally stumbled Friday after James Bullard, president of the Federal Reserve Bank of St Louis, said on Bloomberg TV on Friday that "a small taper is possible in October".

Bullard added that the Fed's decision to maintain its current stimulus program this week, which surprised many markets participants, was "borderline".

For many market watchers, copper's sharp gains this week were already looking shaky.

"The post FOMC short-covering-fuelled rally takes copper above its fair value level, in our view, and should prove difficult to sustain without an improvement in fundamentals," said Gayle Berry, a base metal analyst at Barclays.

"We believe fundamentals are set to weaken as the year progresses with the copper market moving into surplus in the fourth quarter at the same time as the momentum of Chinese demand growth is likely to soften."

Aluminium settled 1.6 per cent lower at $US1,800 a ton Friday.


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