METALS-Copper firms as Fed says to buy Treasury debt

* Copper erases losses, turns up as Fed issues statement

* Fed says will buy long-dated Treasuries, easing credit

* Macquarie Bank predicts more buying by China's SRB

(Recasts with Fed news, updates prices, changes dateline to New York, previous London, changes byline)

NEW YORK, March 18 - Copper shot into positive regions late Wednesday, following a steep rally in U.S. equities when the Federal Reserve said it will buy $300 billion of long-term Treasury debt in the next six months.

Analysts said the implications of easier credit in the Fed's announcement should help the demand outlook for copper.

"I think the fact that they are starting to buy long Treasuries to push down long-term interest rates caused the (copper) market to react," said Edward Meir, commodity analyst at MF Global in New York.

He added that easier credit availability should help improve copper demand by making money cheaper. Copper is used extensively in construction, electronics and many other manufacturing applications.

"Any time you can get rates to come down it will help loosen credit," said Meir.

Copper for three-month delivery on the London Metal Exchange jumped to $3,855 a tonne, up $100 from Wednesday's kerb close to $3,756 and above $3,800 at Tuesday's close.

In New York, copper futures shot up 3.30 cents to $1.7570 a lb by 3:35 p.m. EDT (1935 GMT), after two days at lower levels.

Copper for May delivery had finished 0.75 cent lower at $1.7165 a lb on the New York Mercantile Exchange's COMEX division, but tumbled as low as $1.6935 in early business.

Copper prices trailed U.S. equity markets all day, which were mostly lower as many investors remained cautious ahead of the Fed's policy communique.

But, both equities and base metal prices rallied when the Fed said it would leave its target for short-term interest rates between zero and 0.25 percent for an extended period and that it would buy nearly $1 trillion of long-dated Treasury mortgage-related debt over the next year.

In late trade, the S&P 500 index shot up over one percent and Dow Industrial shares turned positive after news of the Fed's push to revive the recession-hit economy.

The dollar tumbled on the announcement, hitting a two-month low against the euro, which also helped boost copper.

"Bottom line is that the Fed is adding $1 trillion to its balance sheet and that's a lot of taxpayer money. The dollar is selling off because this may contribute to long-term weakness in the currency," said Greg Salvaggio, vice president for trading at Tempus Consulting in Washington.

Analysts said longer-term dollar weakness could continue to support copper and other base metals above current levels.

Three-month aluminium also firmed in late trade, rising to $1,395 a tonne, its highest since Feb. 12. It closed in official rings at $1,378, up from Tuesday's $1,373.

Elsewhere, purchases of 300,000 tonnes of metal by China's State Reserves Bureau (SRB) to build up strategic stockpiles, has helped underpin prices in recent weeks.

Investment bank Macquarie said in a note that copper could get a boost from more SRB buying, estimated between 600,000 to 900,000 tonnes for the rest of the year.

In other metals, battery metal lead fell to $1,290 a tonne from $1,348 on Tuesday, but later rose to $1,325. Zinc MZN3> was last quoted at $1,225 a tonne, up from $1,190 at the close, while stainless steel ingredient nickel firmed to $10,025 a tonne, after finishing lower at $9,875 from $10,050 a tonne on Tuesday.

Tin, alone, remained down at $9,875 from $10,050.

Metal Prices at 1715 GMT Metal Last Change Pct Move End 2008 Ytd Pct

move COMEX Cu 171.10 -0.65 -0.38 139.50 22.65 LME Alum 1375.00 2.00 +0.15 1535.00 -10.42 LME Cu 3765.00 -35.00 -0.92 3060.00 23.04 LME Lead 1300.00 -48.00 -3.56 999.00 30.13 LME Nickel 9850.00 -200.00 -1.99 11700.00 -15.81 LME Tin 9875.00 -325.00 -3.19 10700.00 -7.71 LME Zinc 1190.00 -45.00 -3.64 1208.00 -1.49 SHFE Alu 12010.00 135.00 +1.14 11540.00 4.07 SHFE Cu* 30580.00 140.00 +0.46 23840.00 28.27 SHFE Zin 10730.00 5.00 +0.05 10120.00 6.03 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07