LONDON - Copper prices fell on Thursday as the prospect of further increases to U.S. interest rates sent a ripple of caution through markets and boosted the dollar, making metals costlier for buyers with other currencies.

Benchmark three-month copper on the London Metal Exchange (LME) was down 0.3% at $9,081 a tonne by 1200 GMT.

Prices of the metal used in power and construction surged to a seven-month high of $9,550.50 a tonne in January as the dollar weakened.

However, U.S. economic data has remained surprisingly strong and minutes from the Federal Reserve's latest meeting show policymakers plan to slow -- but not stop -- increases to rates in their efforts to tame inflation.

The dollar reached its strongest since Jan. 6 and analysts said they expect higher-for-longer interest rates to push down global stock markets over the next three months.

"The Fed wants to kill inflation, and that means raising rates for longer. That is hurting base metals," said WisdomTree analyst Nitesh Shah.

"Dollar depreciation has turned around. On top of that, a lot of the enthusiasm on China reopening is fizzling out."

Many investors had hoped Chinese metals demand would rebound quickly after the country abandoned COVID-19 restrictions late last year. But such demand has yet to materialise and metal is piling up in exchange warehouses.

Chinese demand will increase over time, boosting prices, but "a bit of caution is required for the next few months", Shah said.

On the supply side, Canadian miner First Quantum Minerals said its Minera Panama business had suspended ore processing operations at the Cobre Panama mine.

In other metals, LME aluminium was down 0.9% at $2,397.50 a tonne, zinc fell 0.2% to $3,051, nickel dropped 2.5% to $25,760, lead was down 1.1% at $2,081.50 and tin eased by 0.1% to $26,820.

(Reporting by Peter Hobson Additional reporting by Mai Nguyen in Hanoi Editing by David Goodman)