Updates prices

BEIJING, May 22 (Reuters) -Copper prices fell on Wednesday on softening physical demand and higher inventories in top consumer China, while investor caution ahead of the release of minutes of the U.S. FederalReserve's latest policy meeting also weighed on sentiment.

Three-month copper on the London Metal Exchange (LME) CMCU3 was down 1.5% to $10,700.50 per metric ton by 0723 GMT.

The most-traded June copper contract on the Shanghai Futures Exchange (SHFE) SCFcv1 lost 1.1% to 86,220 yuan ($11,910.65) a ton.

Both contracts had hit record highs on Monday amid an investment frenzy into the metal facing raw material supply shortages and demand optimism.

But the rally has far exceeded market fundamentals, which led to recent downward corrections that may continue in the following days, a Chinese trader said.

Record-high prices dampened consumption.

Discount to buy copper in China's spot market widened to 340 yuan per ton on Tuesday, the biggest since January 2015, according to Shanghai Metals Market SMM-CU-PND.

Copper warehouse stocks on SHFE stood at 291,020 tons last Friday, more than four times higher than that in the beginning of February.

Meanwhile, China's April refined copper output rose on a daily average basis from the prior month, easing concerns of smelters' output cut.

The dollar was steady against a handful of peers on Wednesday, as the market assessed calls for patience from Fed officials and awaited the publication of Fed minutes for more insight on the U.S. centralbank's interest rate path.

A stronger dollar makes it more expensive to buy the greenback-priced commodity.

LME aluminium CMAL3 slid 0.6% to $2,708 a ton, nickel CMNI3 dropped 1.1% to $21,075, zinc CMZN3 dipped 0.1% to $3,135.50, tin CMSN3 fell 0.6% to $34,125, while lead CMPB3 gained 0.7% to $2,352.50.

SHFE aluminium SAFcv1 climbed 1.1% to 21,375 yuan a ton, zinc SZNcv1 advanced 0.9% to 24,920 yuan, while tin SSNcv1 shed 0.1% to 277,530 yuan, lead SPBcv1 fell 1% to 18,710 yuan, and nickel SNIcv1 was 0.2% lower to 157,410 yuan.

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TOP/MTL or MET/L

DATA/EVENTS (GMT)

0600 UK Core CPI YY April

0600 UK CPI YY April

1400 US Existing Home Sales April

1800 US Federal Open Market Committee issues

minutes from its meeting of April 30-May 1

($1 = 7.2389 Chinese yuan renminbi)

Reporting by Siyi Liu and Mei Mei Chu; Editing by Mrigank Dhaniwala and Rashmi Aich

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