LONDON: Copper prices marched higher for a third session on Tuesday on signs of a rebound in physical demand, but gains were capped by uncertainty ahead of a US central banking conference.

Three-month copper on the London Metal Exchange (LME) gained 1.1% to $9,372 a tonne by 1600 GMT, building on two previous sessions of gains, including a 2.6% jump on Monday.

Comex copper rose 0.8% to $4.271 per lb.

"The market is suddenly looking stronger, we have buyers out there for the physical stuff, not just the financial players," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"But it's pausing a bit today. Before we know whether we'll see a strong return of investment demand, we need to get past Friday and Jackson Hole, that's the next crucial event risk."

Markets are awaiting more signals on stimulus tapering from the head of the US Federal Reserve, Jerome Powell, who is due to make a speech on Friday at the Jackson Hole meeting of central bankers. His comments are likely to set the direction of the dollar, which has a big impact on copper and other commodity markets.

The dollar index was slightly firmer on Tuesday, making greenback-priced metals more expensive for buyers holding other currencies.

Signs of renewed physical demand for copper included China's Yangshan premium which has more than doubled this month to $122.50 a tonne.

LME on-warrant inventories have slid by a fifth over the past two days while the premium for LME cash copper over the three month contract jumped to $27.95 a tonne by Monday's close, the strongest since April, indicating more demand for near-term supplies.

Prices for aluminium raw material alumina have hit their highest in almost six months after a blaze at the Jamalco refinery in Jamaica led to fears of tighter supply.

LME aluminium rose 0.4% to $2,612.50 a tonne, zinc gained 2.7% to $3,006.50, lead added 0.3% to $2,291.50, nickel was up 0.9% at $19,055 and tin advanced 2% to $32,830.