METALS-London copper hits highest in more than wk on China prospects

* China copper production up by 10.8 pct to 6.1 MT in 2012

* China aluminium output climbs by 13.2 pct to 19.9 MT in 2012

* Coming up; Germany ZEW economic sentiment Jan at 1000 GMT

(Adds comment, detail) SINGAPORE, Jan 22 (Reuters) - London copper climbed to its highest in more than a week on Tuesday on growing confidence in the strength of China's economic recovery ahead of an early gauge of manufacturing activity this week, with gains supported HSBC's flash PMI for January is due on Thursday, while markets in China, the world's largest metals consumer, will be closed for a week in mid-February for the Lunar New Year. Still, buyers are wary of stocking up beforehand after last year finding only scant demand for their products in the seasonally strongest second quarter, after a global economic slowdown dented demand for their exports. "We still have to wait and see whether there is restocking ahead of Chinese new year -- the spot market remains the same for now. Demand might pick up at the end of the first quarter, because of seasonality," said Chunlan Li, a Beijing-based copper analyst with consultancy CRU. Three-month copper on the London Metal Exchange had rallied 0.65 percent to $8,120 a tonne by 0710 GMT, after closing the last session little changed. It earlier hit $8,133.25 a tonne, its highest since Jan. 11 but well within its range for the year. Prices have struggled to gain traction since marking a 2-1/2-month peak near $8,250 a tonne in early January. The physical discount for copper in China eased further to 180 yuan from 170 on Monday, according to Shanghai Metal Market. Also supporting metals gains was the dollar which fell against the euro during currency fluctuations in the wake of the Bank of Japan's surprise decision to adopt an open-ended commitment to buy assets. U.S. markets were closed for Martin Luther King Jr. Day on Monday. The most-traded May copper contract on the Shanghai Futures Exchange gained 0.8 percent to close at 58,910 yuan ($9,500) a tonne. It earlier hit a one-week peak of 59,020 a tonne, its second highest showing for the year. China's refined copper output climbed 22.4 pct in December to a record at 580,000 tonnes, boosting 2012 output by 10.8 percent to 6.01 million tonnes and also a record high.

"China's production has grown by quite bit because many smelters expanded their capacity and we see that production may grow further in 2013," Li added. Copper stocks in China's bonded warehouses hit a record high of over one million tonnes in November. China will push forward market-based reforms on interest rate systems as well as on the currency regime, state radio quoted outgoing Premier Wen Jiabao as saying on Monday.

ALUMINIUM OVERSUPPLY China is the world's top aluminium producer, helped by coal-fired smelters that make its production much cheaper than in the West, where producers are increasingly facing pressure to write down the value of their aluminium operations due to a protracted period of low prices. China's aluminium production rose by 23.8 percent in December to expand more than 13 percent over 2012, reaching 19.9 million tonnes. Rio Tinto announced $14 billion of impairments last week tied to underperforming Mozambican coal and Canadian aluminium operations. Mining firms including BHP Billiton and Anglo American are likely to follow Rio's lead in writing down underperforming assets by as much as $10 billion, as low prices and rising costs eat into valuations. PRICES

Base metals prices at 0710 GMT

Metal Last Change Pct Move YTD pct chg LME Cu 8120.00 65.00 +0.81 2.41 SHFE CU FUT MAY3 58910 480 +0.82 ---- HG COPPER MAR3 369.55 1.65 +0.45 1.18 LME Alum 2045.75 5.25 +0.26 -1.22 SHFE AL FUT APR3 15265 10 +0.07 -0.52 LME Zinc 2043.00 11.50 +0.57 -0.99 SHFE ZN FUT APR3 15485 -60 -0.39 -0.39 LME Nickel 17497.00 117.00 +0.67 1.99 LME Lead 2313.25 13.25 +0.58 -1.14 SHFE PB FUT 15360.00 60.00 +0.39 0.72 LME Tin 25040.00 40.00 +0.16 7.01 LME/Shanghai arb^ 397

Shanghai and COMEX contracts show most active months

($1 = 6.2213 Chinese yuan)

(Reporting by Melanie Burton; Editing by Ed Davies and Joseph Radford)