METALS-Copper gains on outlook for growth ahead of US jobs data
* Tin backwardation eases from three-year highs
* Coming Up; U.S. Employment Report For August at 1230 GMT
(Updates with official prices)
LONDON, Sept 6 (Reuters) - Copper bounced back on Friday after two days of losses ahead of a U.S. jobs report, putting it on track for its first weekly gain in three, amid optimism that global economic recovery would fuel a rise in demand.
Three-month copper on the London Metal Exchange climbed 1.4 percent to $7,203.25 a tonne by 1208 GMT after touching a session high of $7,217, reversing losses from the previous session. Copper failed to trade in official midday activity but was bid at $7,198.
"Seasonally we're going into a strong demand period and the underlying macro story seems to be getting better all the time. I think people have underestimated the strength of demand in China," said analyst Daniel Smith at Standard Chartered in London.
"We still feel the risk is on the upside for copper. I don't see any reason why we can't get up to $7,500 in the next few months, although it's only a mildly bullish story. We're not gung-ho bullish because of the rising supply."
Copper, recovering from a three-week low near $7,080 a tonne hit last week, is trading in a broad $7,000-$7,500 band, underpinned by the slow revival in the global economy but curbed by improving mine supply.
"Things are looking better on the demand side. China looks like it is holding up, and some better news is coming out of Europe," said analyst Matt Fusarelli of AME Group in Sydney.
LME prices were set for a weekly gain of around 1 percent, the first advance since mid-August.
The most active December contract on the Shanghai Futures Exchange edged up 0.3 percent to close at 51,850 yuan ($8,500) a tonne.
After a string of upbeat U.S. economic data, investors were focusing on Friday's jobs report, due at 1230 GMT.
The report is expected to show U.S. job creation picked up in August, signalling a steady pace of economic growth that would give the Federal Reserve ammunition to start scaling back its massive monetary stimulus this month.
"I would have thought that some modest QE withdrawal is not going to take anyone by surprise, but people will be quite cautious ahead of that," Smith said.
Chinese data due out next week are expected to confirm that Beijing has prevented a sharp slowdown in its economy, after the government stepped in with policies to encourage investment and strengthen its hand to push through reforms.
China is the world's top consumer of copper, accounting for around 40 percent of refined demand.
In the tin market, Indonesia's only regulated tin exchange said it was fielding calls from potential buyers of the metal after new trading rules forced a top producer to stop shipments last week.
A shortfall in supply helped push up LME cash tin to the highest premium in three years at $125 on Wednesday. This moderated to $77 on Thursday.
"At the same time, there have been clear signs recently of an upturn in tin demand, and on our estimates the global tin market was already on course to record a small deficit this year before these latest developments in Indonesia," analyst Duncan Hobbs at Macquarie said in a note.
LME three-month tin added to recent gains, jumping 3.3 percent to a session high of $22,770 a tonne. It failed to trade in official rings, but was bid at $22,700.
Tin has been the best performer among LME metals in the second half, rising about 13 percent.
Aluminium gained 1.7 percent to $1,829 a tonne in official trading, and lead climbed 1.9 percent to $2,165.
Zinc and nickel failed to trade in official rings. Zinc was last bid at $1,903 a tonne, up 1.8 percent from Thursday's close, while nickel was bid at $13,970, up 1.7 percent.
(Additional reporting by Melanie Burton; editing by William Hardy and Jane Baird)