* Copper premiums for China shipments hit 2016 low
* Coming up: U.S. industrial output for Feb at 1315 GMT (Adds comment, detail; updates prices)
By Melanie Burton
MELBOURNE, March 16 (Reuters) - Copper drifted in listless trade on Wednesday as the dollar held gains ahead of a U.S. Federal Reserve meeting where monetary officials are expected to affirm at least one further rate hike is on the cards this year.
A stronger dollar has tempered an 8-percent advance by copper in the past month amid encouraging signs the world's top two economies could be getting on track. A firmer greenback makes commodities more expensive for consumers paying with other currencies.
"This rally we've had across commodities and stocks in risk appetite ... a lot of it is on a hope you have China strengthening this year," said Daniel Morgan at UBS in Sydney, adding that prices may have overshot fundamentals.
"That may come through but what we're seeing in the physical trade right now is that there are no signs of anxiety in securing supply."
U.S. Fed policymakers are expected to leave short-term interest rates unchanged at a two-day policy meeting that began Tuesday, but also to signal that a rate hike is not too far off as long as the job market and inflation continue to improve. copper on the London Metal Exchange CMCU3 had edged down half a percent to $4,923.50 a tonne by 0314 GMT, extending losses from the previous session. Prices have found a floor around the $4,875 mark, while the approaching 200-day moving average ceiling at $5,023 flags a looming breakout.
Shanghai Futures Exchange copper SCFcv1 slipped 0.3 percent to 37,230 yuan ($5,710), but still holding above the 200-day moving average at 38,238.
Shanghai copper stocks CU-STX-SGH have doubled since the start of the year to sit at record highs of 350,000 tonnes as a steep selloff in LME copper prices to six-year lows fuelled a wave of imports.
But reflecting ample supply, premiums for copper shipments bound for China fell by $7.50 to $80, the lowest level since late December, Reuters data showed. CU-BPCIF-SHMET
China's Premier Li Keqiang said the government will keep promoting market-oriented reforms in the country's financial markets and will improve coordination in financial regulation.
Retailers in China are shedding staff, slowing expansion plans and seeing stocks pile up in warehouses as shoppers tighten their belts - a major headache for a country that has pinned its hopes on consumers to drive economic growth. manufacturers are abandoning copper for its lighter and cheaper rival aluminium after a decade of technological innovation that is saving some companies hundreds of millions of dollars. BHP Billiton BHP.AX BLT.L Chief Executive Andrew Mackenzie on Wednesday said the world's biggest miner sees iron ore prices falling, with oversupply set to keep them "lower for longer". month LME copper
CMCU3
Most active ShFE copper
SCFcv1
Three month LME aluminium
CMAL3
Most active ShFE aluminium
SAFcv1
Three month LME zinc
CMZN3
Most active ShFE zinc
SZNcv1
Three month LME lead
CMPB3
Most active ShFE lead
SPBcv1
Three month LME nickel
CMNI3
Most active ShFE nickel
SNIcv1
Three month LME tin
CMSN3
Most active ShFE tin
SSNcv1
($1 = 6.5196 Chinese yuan renminbi) ($1 = 6.5200 Chinese yuan renminbi)