METALS-Copper slightly down, U.S. fiscal deal uncertainty weighs
* Investors bet Washington to clinch deal to avert cliff
* US copper speculators raise net longs to highest since Aug 2011
* LME copper may fall to $7,757 - technicals
LONDON, Dec 24 (Reuters) - Copper inched down on Monday, after posting its biggest weekly drop in more than six months, as the Christmas holiday lull set in across markets and uncertainty about the U.S. fiscal talks weighed on the outlook for industrial metals.
Negotiations to avert $600 billion worth of tax hikes and spending cuts due to take effect in the new year have dragged on, with some U.S. lawmakers voicing concerns on Sunday that the country would go over the "fiscal cliff" in nine days.
But most risk assets were little changed on the last trading week of the year as most global investors bet Washington would reach an agreement to prevent the world's top economy from slipping into another recession.
Three-month copper on the London Metal Exchange traded at $7,801 a tonne in official rings, only slightly down from a close $7,831.50 on Friday.
The metal, used in power and construction, lost nearly 3 percent in the previous week - its steepest weekly drop since early June.
"A majority of people anticipate a deal will be done, even if bit after the deadline. (Also) macro data has looked more constructive of late. In that environment, there's a little more optimism about the outlook (for metals) in the coming months," Macquarie analyst Duncan Hobbs said.
Looking further ahead, however, Hobbs warned: "Copper continues to trade at high prices by historic standards at a time where people expect the (supply-demand) balance will ease over the next few years."
Speculators raised their net length in U.S. copper to 24,531 contracts in the week ended Dec. 18, the highest since August 2011, data from the U.S. Commodity Futures Trading Commission showed.
The dollar was down slightly against the euro but up strongly from last week's eight-month lows as a lack of progress in U.S. budget talks led investors to the perceived safe haven of the greenback. A strong dollar makes dollar-priced metals pricier for non-U.S. investors.
"Monday will likely be quiet as it's a shortened trading day, but we think there will be some fireworks in the run-up to year-end, particularly as the situation around the cliff evolves," RBC Capital Markets said in a note.
Chilean miner Antofagasta has halted development at its $1.7 billion copper mine Antucoya as it reviews escalating costs of the project. Peru plans to nearly double its copper output in the next two years and will not give up on a $5 billion project by Newmont Mining, which has stalled due to community opposition.
Technical analysis suggested that LME copper could fall to $7,757 during the day as a weak rebound from last Thursday's low of $7,735 seems to have ended, Reuters market analyst Wang Tao said.
Soldering metal tin traded at $23,200 a tonne from $23,225, while zinc, used in galvanizing, was untraded in rings but was bid at $2,090 a tonne from a last bid of $2,082 on Friday.
Battery material lead traded at $2,319 from $2,307 close on Friday, aluminium traded at $2,092 from $2,082, while stainless-steel ingredient nickel traded at $17,005 from $17,350.