LONDON - Copper prices extended losses on Tuesday on concern ahead of a U.S. Federal Reserve meeting that prolonged high interest rates will dampen metals demand and as inventories pile up.

Three-month copper on the London Metal Exchange was down 0.8% at $8,290 per metric ton in official open outcry trading, after a 0.6% decline in the previous session.

While the U.S. Fed is not expected to raise rates on Wednesday, the prospect of holding them at high levels to crush inflation has caused uncertainty in financial markets.

"We're expecting higher rates for longer because the strength of economic data is largely supportive and while inflation is cooling, we're really not out of the woods yet, especially with energy prices re-igniting as well," said Nitesh Shah, commodity strategist at WisdomTree.

"There's nothing giving the metals market any major conviction in either direction. We have a little softening of prices today because of the China drag and uncertainty of how much longer the Fed will remain with a broadly hawkish outlook."

China has been rolling out modest stimulus measures, but economic growth is lacklustre and investors are concerned about the country's debt-laden property sector, with U.S. business optimism about China having slid to a record low.

The most-traded October copper contract on the Shanghai Futures Exchange shed 0.8% to 68,790 yuan ($9,426.52) per ton, extending losses following a 0.4% drop on Monday.

Traders were also keeping an eye on the depreciation pressure on China's yuan against the U.S. dollar, which could also affect Chinese demand for greenback-priced industrial metals.

The pressure is temporary, Chinese state media said on Tuesday, as the yuan has fallen more than 5% on the greenback year-to-date.

Inventories in LME-regulated warehouses continue to build, highlighting rising supply amid weak demand.

LME copper stocks have soared by 175% since mid-July to 149,600 metric tons, the highest since May 2022.

LME aluminium dipped 0.2% to $2,215 per metric ton, zinc shed 1.4% to $2,506 per ton, lead eased 1.2% to $2,220, and tin fell 1.4% to $25,825.

Nickel slumped 1.4% to $19,600 after touching a 14-month low of $19,550.

($1 = 7.2975 Chinese yuan)

(Reporting by Eric Onstad Additional reporting by Enrico Dela Cruz in Manila, Editing by Louise Heavens)