METALS-Copper slips to four-month lows on Cyprus contagion fears

* Traders note small returning interest from China consumers

* Shfe copper forward curve flips into backwardation on heavy sales

* Coming Up; Germany ZEW economic sentiment Mar 2013 at 1000 GMT

(Adds comment, updates prices) SINGAPORE, March 19 (Reuters) - London copper sank to a four-month low for a second day on Tuesday on news that Cypriot lawmakers were unlikely to approve a controversial bailout plan, which might spark a new euro zone crisis, while consumers in China showed little buying interest. Markets have been waiting for top copper consumer China to return after its Lunar New Year holiday, and as its once in a decade leadership transition winds up, especially as the seasonally strongest second quarter gets underway. But even with prices near their lowest for the year, consumers seem content to nibble, traders said. Three-month copper on the London Metal Exchange fell 0.30 percent to $7,553.25 a tonne by 0709 GMT, paring early gains, and adding to losses of more than two percent from the previous session. Copper earlier fell to $7,531 a tonne, its lowest since Nov. 9, from a session high above $7,600. The most-traded July copper contract on the Shanghai Futures Exchange fell 0.67 percent to 54,910 yuan ($8,800) a tonne, holding above the prior session's seven-month lows. Light selling also hit the LME contracts for aluminium , lead and zinc, although the three still held above recent four-month troughs. "We expect the Cyprus situation to be contained, with no further spillover, but technically and from what we see in terms of inventory dynamics, there is absolutely no reason to get immediately bullish" said Singapore-based analyst Dominic Schnider at UBS. "We still expect in the seasonally stronger second quarter that we should see some recovery (in China demand) kicking in. But at the moment, that seems to be more wishful thinking," he added. The euro also hovered around three-month lows versus the dollar on Tuesday on the news that Cyprus's parliament was unlikely to approve the bailout plan. Cyprus's parliament was set to reject a divisive tax on bank deposits in a vote on Tuesday, pushing the island closer to a debt default and banking collapse. Also muting buying interest are China's domestic copper stockpiles that have only recently turned down from near record levels. Monday's steep price fall presented a chance for buyers to check prices, but they were still reluctant to commit, said a Hong Kong based trader. "Recently we've seen downstream buying and restocking is improving, especially for the air conditioning sector and some white goods," he said, adding however that orders from the cable sector appear to be weaker than this time last year.

AGGRESSIVE SHORTING Front-month Shanghai copper prices have flipped into a premium against those further back this week for the first time since October, flagging not an increase in nearby demand, but instead heavy selling on the more liquid contracts, Standard Bank said. "The interesting thing to note was just how aggressively copper was sold in China, with open interest on the ShFE increasing by 17 percent, while the 3-month ShFE futures contract fell 2.8 percent," Standard Bank said in a client note. "Much of ShFE selling pressure was focused in the July-13 and August-13 contracts, with the weight of futures selling pushing the liquid nearby portion of the SHFE forward curve into a backwardation." PRICES Base metals prices at 0709 GMT

Metal Last Change Pct Move YTD pct chgLME Cu 7553.25 -22.75 -0.30 -4.74SHFE CU FUT JUL3 54910 -370 -0.67 -4.80HG COPPER MAY3 341.85 -0.95 -0.28 -6.41LME Alum 1936.00 0.00 +0.00 -6.52SHFE AL FUT JUN3 14655 -40 -0.27 -4.50LME Zinc 1920.00 1.00 +0.05 -6.95SHFE ZN FUT JUN3 14850 -695 -4.47 -4.47LME Nickel 16544.00 -61.00 -0.37 -3.56LME Lead 2170.50 -14.50 -0.66 -7.24SHFE PB FUT 14515.00 25.00 +0.17 -4.82LME Tin 23150.00 50.00 +0.22 -1.07LME/Shanghai arb^ -71

Shanghai and COMEX contracts show most active months

($1 = 6.2158 Chinese yuan)

(Reporting by Melanie Burton; Editing by Richard Pullin and Tom Hogue)