METALS-Copper turns positive on back of weak dollar, ECB rates
* Italian PM wins confidence vote
* Investors concerned about growing surplus
* Liquidity thin with China on holiday
LONDON, Oct 2 (Reuters) - Copper rose off a one-week low on Wednesday, as the dollar struggled against the euro on weak U.S. jobs data and after the European Central Bank decided to keep rates unchanged.
Benchmark three-month copper on the London Metal Exchange closed up 1.13 percent at $7,279 a tonne, from $7,199 on Tuesday.
Copper, used in power and construction, had made losses during European trading hours, falling to its weakest in a week at $7,142 on worries about the impact of the first partial U.S. government shutdown in 17 years.
But it recovered and turned positive after a surprisingly weak U.S. private sector jobs report sapped the dollar, while European Central Bank President Mario Draghi provided a firm boost to the euro by sticking to the ECB's current stance on monetary policy.
The euro was further buoyed at the dollar's expense on a stabilizing political situation in Italy, where Prime Minister Enrico Letta earlier won a confidence vote in the Senate, improving appetite for riskier assets like base metals.
A softer U.S. unit against other currencies makes dollar-priced metals cheaper for non-U.S. investors.
"What might have led the copper prices up today is the weaker dollar. The prices, despite recovering a bit today, are still below the levels which we consider to be fair," said Eugen Weinberg, head of commodities research at Commerzbank.
"We do believe that Chinese demand picked up in the summer, and improving indicators are pointing to the direction that the Chinese economy is again back on the growth path. That is the single most important factor behind our expectations for higher copper prices."
Trading volume was thin with China, which accounts for 40 percent of global refined copper demand, away until Oct. 7 for National Day holidays.
Some investors however were worried about the longer-term prospects for the metal, due to a looming supply surplus. Copper has lost more than 8 percent this year.
"As new supply arrives during 2014-15, the market is likely to move into a lengthy period of oversupply, which will gradually push copper prices lower," Natixis said in a note.
"While physical scarcity may help to support spot prices over the remainder of this year, the medium term outlook for copper prices is for a steady decline."
In other metals, tin closed at $22,825 a tonne from $23,050 at the close on Tuesday, having earlier hit a near-three week low of $22,550.
Aluminium closed at at $1,838, a rise of 0.7 percent from Tuesday's close and nickel gained by 0.2 percent to close at $13,780 against a previous close of $13,750.
Zinc finished up 0.6 percent at $1,888 a tonne, from $1,878 on Tuesday while lead rose 0.5 percent to $2,075.