METALS-Copper surges to near-month peak, capped after U.S. data

* All metals surge to highest since Jan. 3

* Pares gains after U.S. GDP falls in Q4

* Upside also capped as physical demand still weak

* Coming up; FOMC Policy decision at 1915 GMT

(Adds details, official prices) LONDON, Jan 30 (Reuters) - Copper climbed to the highest in nearly a month on Wednesday on largely upbeat economic data, but the upside was capped by caution about weak underlying metals demand and a setback in U.S. growth. A hefty rise in U.S. home prices on Tuesday was followed by a stronger than expected improvement of economic sentiment in the euro zone on Wednesday, lifting the euro. But there was evidence that the road to economic recovery will be rocky as fresh data on Wednesday afternoon showed that the U.S. economy unexpectedly contracted in the fourth quarter as GDP fell at a 0.1 percent annual rate, which helped knock copper from its intraday highs. Three-month copper on the London Metal Exchange surged 1.4 percent to $8,215 a tonne in official trading in the third day of gains, after touching $8,240, its highest since Jan. 3. The most-traded May copper contract on the Shanghai Futures Exchange added about 1 percent to end at 59,260 yuan ($9,500) a tonne. It earlier marked its highest point since Sept. 28 at 59,400 yuan a tonne. "The whole metals complex has become addicted to a decent flow of macro numbers from China and the United States, which is good, because it definitely signifies that China is turning the corner and the U.S. is getting back on track," said analyst Andrey Kryuchenkov at VTB Capital in London. "However, fundamentally I don't think it is justified at the moment and maybe this is one of the reasons why earlier in January copper failed to break $8,200." On January 3 and 4, copper jumped to intraday highs around $8,250 a tonne, but failed to close much above $8,200 on both days and the rally later fizzled out. Despite the stronger economic data, underlying demand in top metals consumer China has been lacklustre. Kryuchenkov pointed to the fact that cancelled LME copper warrants, which occur when someone wants to withdraw metal from a warehouse, have declined by nearly half since Jan. 3. Traders say copper made progress this week from a combination of fresh long positions and short-covering, but the upside may be capped ahead of a decision week. "Copper is also trading a little more cautiously ahead of the Chinese new year. As a result we won't be expecting such a huge price rally on the back of China's factory figures, but it will certainly be supportive if they improve as expected," said commodities analyst Natalie Robertson of ANZ in Melbourne. China's factory activity in January, scheduled for release on Friday, probably expanded at its fastest pace in nine months, adding to signs that recovery momentum is building as domestic demand strengthens.

OTHER METALS SWEEP HIGHER A stronger euro, which rose to its highest level in 14 months against the dollar, was also helping to lift metals markets. A weaker dollar makes metals cheaper for holders of other currencies. Analysts said the common currency was likely to gain further, given expectations that U.S. fourth-quarter gross domestic product data, due later in the day, could show growth slowing Other LME metals also swept higher and all of them joined copper at near-month peaks, rising to the highest since Jan. 3. Galvanizing material zinc was the top performer, surging 2.2 percent to $2,142 a tonne in official trading. Even though LME zinc stocks <MZNSTX-TOTAL> are high at 1.21 million tonnes, over the past few weeks the picture has improved slightly with inventories edging down and cancelled warrants rising by 13 percent. Lead and tin, the only two metals expected to have market deficits this year, also pushed higher. Lead, mostly used for batteries, gained 1.8 percent to $2,448 a tonne in official rings. Solder material tin failed to trade in official rings, but was bid at $25,050 a tonne, up 1.6 percent from Tuesday's close. The benchmark cash-three months spread <CMSN0-3> went into a $2 backwardation at Monday's close, the first backwardation since Dec. 19 for any major LME metals, but tin was back in a $1 contango by Tuesday's close. Aluminium gained 1.2 percent to $2,085.50 per tonne in official trading and nickel added 2.2 percent to $18,240.

PRICES

Metal Prices at 1350 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T

Metal Last Change Pct Move End 2012 Ytd Pct

move

COMEX Cu 373.55 4.40 +1.19 365.25 2.27 LME Alum 2084.00 24.00 +1.17 2073.00 0.53 LME Cu 8211.75 108.75 +1.34 7931.00 3.54 LME Lead 2443.00 38.00 +1.58 2330.00 4.85 LME Nickel 18213.00 363.00 +2.03 17060.00 6.76 LME Tin 24970.00 320.00 +1.30 23400.00 6.71 LME Zinc 2139.25 44.25 +2.11 2080.00 2.85 SHFE Alu 15215.00 60.00 +0.40 15435.00 -1.43 SHFE Cu* 59050.00 550.00 +0.94 57690.00 2.36 SHFE Zin 15815.00 215.00 +1.38 15625.00 1.22 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN

SHFE ZN began trading on 26/3/07

($1 = 6.2243 Chinese yuan)

(Additional reporting by Melanie Burton; editing by James Jukwey)