METALS-Copper edges up on China prospects; euro woes cap gains

* Zinc treatment charge talks seen favouring smelters ahead of annual deals

* China industry has access to cash, real demand to pick up - exec

* U.S. New York Fed manufacturing at 1330 GMT

(Adds comment, quote, updates prices) SINGAPORE, Feb 15 (Reuters) - London copper inched higher on Friday, buoyed by hopes China will restock on a return from holidays next week, but was still set to log its largest weekly loss this year after the euro zone recession deepened more than expected at the end of 2012. Three-month copper on the London Metal Exchange traded at $8,251 a tonne by 0327 GMT, adding 0.17 percent to the previous session's small 0.13 percent gain. Copper prices are set to close the week down around 0.50 percent. Prices have tailed back by just over a percent from a 4-month peak of $8,346 a tonne hit in early February, but are still up four percent for the year. The Shanghai Futures Exchange is closed this week. "Right now, demand for copper is only coming from China and the U.S. because Europe is a mess," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong. "The stock market is quite bullish and people are excited about a Chinese rebound. Given a liquidity improvement ... real demand for copper will pick up," he said. While a revival in copper demand is taking root in China, the effect on the copper market will be dampened by sky high domestic inventories, Liu added. China's copper stockpiles over the year-end reached record levels above 1 million tonnes. Markets were struggling to find momentum on Friday. Asian shares eased and the euro nursed heavy losses, with investors turning cautious as weak euro zone growth data presaged a bleak outlook ahead of the G20 meeting in this session and on Saturday in Moscow. The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region. One bright spot was seen in the U.S. with the number of Americans filing new claims for unemployment benefits fell more than expected last week, offering hope the sluggish labour market recovery may have picked up a step. It was still China, though, that was feeding most of the positive sentiment in Asia, an executive at a top South East Asian bank said. "People are feeling more confident about projects going forward and money has already been released," he said. The executive said he thinks Chinese consumers have already started restocking and he sees real consumption improving after the Lunar New Year holiday, which finishes this week.

SMELTERS' STRONG HAND Miner and smelters are to begin setting zinc treatment charges later this month on the fees smelters get to turn zinc into refined metal. Smelters may gain the upper hand this year as the zinc market is seen in 180,000 tonnes of surplus for 2013, a Reuters poll of analysts showed. Early talks suggest smelters may win slightly more favourable terms, according to figures in an ANZ report. "Currently the negotiating range between major zinc miners and smelters is believed to be $186-230 per tonne of concentrate, basis a zinc price of $2,000/t," the bank said. Last year major players agreed to terms of $191 per tonne, down more than 16 percent from the year before. The deals are usually hammered out at an annual zinc conference, which this year will be held Feb. 24-27 in Mexico.

PRICES

Base metals prices at 0319 GMT

Metal Last Change Pct Move YTD pct chg LME Cu 8251.00 14.00 +0.17 4.06 SHFE CU FUT MAY3 -- -- -- -- HG COPPER MAR3 374.55 0.80 +0.21 2.55 LME Alum 2155.50 -2.50 -0.12 4.08 SHFE AL FUT MAY3 -- -- -- -- LME Zinc 2193.00 4.00 +0.18 6.28 SHFE ZN FUT MAY3 -- -- -- -- LME Nickel 18315.00 60.00 +0.33 6.76 LME Lead 2415.00 8.50 +0.35 3.21 SHFE PB FUT -- -- -- -- LME Tin 24825.00 0.00 +0.00 6.09 LME/Shanghai arb^ 1955

Shanghai and COMEX contracts show most active months

(Reporting by Melanie Burton; Editing by Tom Hogue)