METALS-London copper drifts; signs of China, US recovery support
* Investors raise bullish bets on copper -CFTC data
* LME copper cancelled warrants jump to highest since May
* Coming up: euro zone Sentix index for January at 0930 GMT
(Adds detail, updates prices) MELBOURNE, Jan 7 (Reuters) - London copper edged lower on Monday on worries the U.S. Federal Reserve could halt asset purchases as soon as this year, although signs the world's top two economies are inching into recovery supported prices. Copper hit its highest in more than two months last week after U.S. lawmakers struck a deal to avoid going over the so-called fiscal cliff of devastating tax increases and spending cuts. But minutes from the latest Fed meeting signalled it may rein in easing measures sooner than expected, broadly souring investor sentiment. Metals prices have been underpinned by global manufacturing indexes, however, with data showing China's economy has regained momentum while the U.S. economy is slowly mending, with more numbers out this week. "The market is looking at China data at the end of the week for confirmation of the recovery in Chinese activity," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. Three-month copper on the London Metal Exchange was down 0.16 percent at $8,072 a tonne by 0707 GMT, after losses of almost 1 percent in the previous session. After closing 2012 with gains of 4.3 percent, copper prices rallied to $8,256.50 a tonne on Jan. 3, the highest since Oct. 18. Copper prices are up 1.8 percent year-to-date. China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high. China's trade and producer price data is due later in the week. China is the world's top consumer of industrial metals, accounting for around 40 percent of refined copper demand. The most-traded April copper contract on the Shanghai Futures Exchange closed down 0.24 percent at 58,220 yuan ($9,300) a tonne. The Fed could halt its asset purchases this year, two top officials at the central bank suggested on Friday, a view also gaining traction among economists at Wall Street's top financial institutions. U.S. employers kept their pace of hiring steady in December, although slightly falling short of the levels needed to bring down a still lofty unemployment rate. "Positive sentiment from the fiscal cliff deal, as well as Friday's employment report, is likely to carry into this week," Texas-based consultancy Prestige Economics said in a report. European stock index futures pointed to a mixed open on Monday, with some investors seen taking profits after recent highs, although banks could gain after global regulators eased new liquidity rules.
FUNDAMENTAL TURN There were signs investors are turning more bullish for copper's 2013 outlook as hedge funds and money managers increased the size of their net longs in the week to Dec. 31, Commodity Futures Trading Commission data showed on Friday. For copper, speculative investors increased their net longs Signs of increased demand for copper were also seen in new orders - or cancelled warrants - for copper in the latest LME stocks data. Cancelled warrants rose by 23075 tonnes to 71,575 tonnes, the highest since early May 2012, the most recent LME data showed. Copper for delivery and unavailable to market stands at almost one quarter of LME supplies. <MCUSTX-TOTAL> PRICES
Base metals prices at 0707 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 8072.00 -13.00 -0.16 1.80 SHFE CU FUT APR3 58220 -140 -0.24 0.94 HG COPPER MAR3 367.55 -1.80 -0.49 0.63 LME Alum 2058.75 -1.25 -0.06 -0.59 SHFE AL FUT MAR3 15265 -50 -0.33 -0.52 LME Zinc 2044.00 4.00 +0.20 -0.94 SHFE ZN FUT MAR3 15380 -165 -1.06 -1.06 LME Nickel 17423.00 73.00 +0.42 1.56 LME Lead 2341.00 6.00 +0.26 0.04 SHFE PB FUT 15170.00 -80.00 -0.52 -0.52 LME Tin 23860.00 60.00 +0.25 1.97 LME/Shanghai arb^ 752
Shanghai and COMEX contracts show most active months
($1 = 6.2303 Chinese yuan)
(Reporting by Melanie Burton; Editing by Joseph Radford and Muralikumar Anantharaman)