METALS-LME copper gains as global recovery outweighs China data

* China's official PMI eases to 50.4 in January

* HSBC final January PMI hits two year high

* Coming Up: Euro zone manufacturing PMI; 0858 GMT

(Updates prices) SINGAPORE, Feb 1 (Reuters) - London copper rose on Friday but stayed off four-month highs struck in the previous session as growing confidence about a global economic recovery overcame a tepid expansion in China's factory sector in January. Speculators took bullish bets on copper this week after signs that Europe's banking sector was turning a corner while consumer confidence and spending has grown there and in the United States. An official report on China's factories showed a tepid expansion in January but this was not enough to sour sentiment towards metals. "Chinese data should get stronger into the second quarter. Global indicators are improving, so it makes sense to a certain extent that speculators are taking another look at copper," said analyst Bonnie Liu of Macquarie in Singapore. Liu said she expected copper's rally to fizzle out over the extended Lunar New Year holiday, with the scale of Chinese demand this year not expected to become clear until March, when China's factories have ramped back up. Three-month copper on the London Metal Exchange climbed by 0.73 percent to $8,225 a tonne by 0713 GMT, reversing losses from the previous session, when it retreated after hitting the highest in nearly four months. Copper prices rose as high as $8,291.25 a tonne on Thursday, the loftiest since Oct. 5, before profit-taking pulled prices down 0.74 percent on the day. The most-traded May copper contract on the Shanghai Futures Exchange climbed 0.17 percent to close at 59,660 yuan ($9,600) a tonne. China's giant manufacturing sector extended its mild recovery in January with weak foreign demand still crimping growth, a pair of surveys showed, underscoring that the country's rebound from its worst downturn in 13 years remains modest. Open interest and volumes for LME copper have hit 2013 peaks this week. Coupled with rising prices, this suggests investors have taken fresh bullish bets on copper. LME open interest rose 2,531 lots to around 252,000 lots on Wednesday, according to the latest exchange data. <MCU-OI-TOT> "If the Chinese come in and buy after the holidays or we get another stimulus boost, then we can easily see the complex taking out recent highs as macro players will scramble to get in and play from the long side," RBC Capital said in a note. "Until then, we sit on the fence." Attention is shifting now to a U.S. jobs report that will be closely watched for signals of health. Hiring by U.S. employers is likely to have held steady in January, pointing to modest growth in the economy despite worries that budget battles in Washington could derail the recovery.

CHINA COMEBACK Mexican copper miner and railroad operator Grupo Mexico said it expected copper prices to remain at or above current levels, supported by solid industry fundamentals. "Little by little Chinese demand is recovering," it said. China makes up about 40 percent of refined copper demand. Grupo Mexico, which plans to increase investment 65 percent this year, posted record production of 826,209 tons of copper content in 2012. PRICES

Base metals prices at 0713 GMT

Metal Last Change Pct Move YTD pct chg LME Cu 8225.00 60.00 +0.73 3.73 SHFE CU FUT MAY3 59660 100 +0.17 3.43 HG COPPER MAR3 374.15 0.95 +0.25 2.44 LME Alum 2101.00 11.00 +0.53 1.45 SHFE AL FUT MAY3 15315 -30 -0.20 -0.20 LME Zinc 2139.00 -6.00 -0.28 3.66 SHFE ZN FUT MAY3 16045 500 +3.22 3.22 LME Nickel 18400.00 50.00 +0.27 7.26 LME Lead 2432.25 1.25 +0.05 3.94 SHFE PB FUT 15505.00 -40.00 -0.26 1.67 LME Tin 24770.00 20.00 +0.08 5.85 LME/Shanghai arb^ 436

Shanghai and COMEX contracts show most active months ($1=6.2188 Chinese yuan)

($1 = 6.2188 Chinese yuan)

(Reporting by Melanie Burton; Editing by Clarence Fernandez)