Aluminium hits six-year low on firmer dollar

Aluminium hit a six-year low on Wednesday while other base metals also slipped as the dollar strengthened on speculation that the United States was closer to raising interest rates, a view bolstered by strong economic data.

But losses were held in check after data showed activity in the services sector of China, the world's top metals consumer, expanded in July at its fastest pace in 11 months.

Markets were pressured by the dollar hitting a 3-1/2 month peak against a basket of currencies after a voting member of the U.S. Federal Reserve's policy-setting committee expressed support for an interest rate rise in September.

The dollar was also boosted by data on Wednesday showing the pace of growth in the U.S. service sector surged in July to its strongest level in a decade.

A stronger dollar makes commodities priced in the U.S. currency more expensive to buyers using other currencies.

Three-month aluminium on the London Metal Exchange closed down 1.1 percent at $1,595 a tonne, the weakest since July 2009. The metal, used in transport and packaging, is down by a fifth since early August.

Speculators increased short positions in LME aluminium last week to the highest levels since mid-January.

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