Copper edges up as U.S. data sustains global growth hopes

* Shanghai bonded copper premium up $65-$70 -trader

* Copper to end year around $3.20-$3.30/lb ($7,055-$7,275 T) -AME Group

* Coming Up: U.S. industrial output ; 1315 GMT

(Adds analyst, trader quote, updates prices) SINGAPORE, March 15 (Reuters) - London copper firmed on Friday and was set to close higher for a second straight week after U.S. jobs and inflation figures showed further signs of economic recovery, but prices were capped as high stockpiles in China discouraged buyers. Three-month copper on the London Metal Exchange rose Copper is set to close the week up around one percent, but still remains in negative territory for the year, having dropped more than 6 percent from early February's 2013 peaks. The most-traded July copper contract on the Shanghai Futures Exchange rose 0.65 percent to 56,910 yuan ($9,200)a tonne. "We see copper fully priced where it is at the moment," said analyst Matt Fusarelli at consultancy AME Group in Sydney. "We are expecting a surplus this year of copper and we are now up several hundred thousand tonnes since the start of the year, indicative of where the market is moving," he added. ShFE and LME copper stocks have climbed more than 200,000 tonnes, or more than a quarter of combined total stocks so far this year.<MCU-STOCKS> <CU-STX-SGH> AME expects prices to ease over the second quarter and close the year around $3.20 a pound ($7,055-$7,275 a tonne). The number of Americans filing new claims for unemployment benefits dropped for a third straight week last week, the latest indication the labor market recovery was gaining traction. A second report from the Labor Department offered little reason to worry about a rise in inflation, with food prices at the wholesale level almost reversing January's increase and the cost of automobiles rising only marginally. Other data on Thursday showed a spike in the cost of gasoline pushed up producer prices last month, but a lack of broad price pressures gives the Federal Reserve scope to maintain its very easy monetary policy. "Ahead of today's consumer price index release from the United States, the market will be watching closely whether quantitative easing (QE) has impacted on inflation," Mizuho Corporate Bank said in a research note. "The Fed has a target inflation of around 2.0 percent. Should CPI numbers post a big gain then it will be another round of USD buying, which would provide further consolidation to the belief that QE will be ending," the bank said. Any increase in the dollar could weigh on metals prices as a firmer dollar typically erodes metals demand because buyers with other currencies have to pay more for their metal.

MARKETS NEWS China buying has been supporting prices, helped by a narrowing price between Shanghai and the landed cost of LME copper, which attracts a 17 percent value-added tax for imports. Chinese investors import metal to sell into the domestic market and obtain funds to invest in other higher yielding assets such as real estate. This play helped to swell Shanghai's bonded stocks to record highs this year. Importers would still have to pay a price differential of 67 yuan ($10.78) on Friday, much less than 600 yuan in December, helping firm premiums of domestic copper. "Bonded premiums are up around $20 from this time last year at $65-$70," said a trader at a Chinese merchant. "We haven't seen any consumer demand, just buying for long term contracts." PRICES Base metals prices at 0247 GMT

Metal Last Change Pct Move YTD pct chgLME Cu 7820.00 20.00 +0.26 -1.37SHFE CU FUT JUL3 56910 370 +0.65 -1.33HG COPPER MAY3 354.40 0.75 +0.21 -2.97LME Alum 1978.00 -1.00 -0.05 -4.49SHFE AL FUT JUN3 14810 -35 -0.24 -3.49LME Zinc 1983.00 7.00 +0.35 -3.90SHFE ZN FUT JUN3 15280 -265 -1.70 -1.70LME Nickel 17185.00 -40.00 -0.23 0.17LME Lead 2243.00 -5.50 -0.24 -4.15SHFE PB FUT 14745.00 45.00 +0.31 -3.31LME Tin 23925.00 0.00 +0.00 2.24LME/Shanghai arb^ -67

Shanghai and COMEX contracts show most active months

($1=6.2155 Chinese yuan)

(Reporting by Melanie Burton; Editing by Clarence Fernandez)