METALS-Copper drops on supply woes but delayed tapering hopes lend support
* Nickel prices climb on Indonesia export ban hopes
Lead, zinc prices near 7-week highs as investors eye smaller metals
* Backlog of U.S. data due from Tuesday with Sept jobs report
* Coming Up: U.S. existing home sales at 1400 GMT
(Adds analyst's quotes; Updates prices)
By Melanie Burton
SINGAPORE, Oct 21 (Reuters) - London copper prices edged down on Monday on the prospect of rising supply, but hopes the United States would delay tapering its massive economic stimulus underpinned demand for metals.
Once the darling of investors, copper's price outlook has been tarnished by expectations of a surplus next year. As a result, investors are eyeing opportunities in the smaller markets of nickel, lead and zinc, said Sijin Cheng, analyst at Barclays in Singapore.
"One problem for copper is that investors don't have a lot of conviction on where it will trade in the short term and no one is really positioned - demand might be okay but supply is going to rise," she said.
A feared surplus in copper that was expected to swamp the market this year has failed to send prices tumbling, but many analysts and investors are counting on a delayed reaction next year.
"In the smaller metals, investors are getting a bit more positive because the downside is quite limited so the risk- reward might look good, for example with Indonesia's proposed export ban (on raw materials exports) next year," said Cheng.
Three-month copper on the London Metal Exchange had slipped 0.28 percent to $7,225 a tonne by 0241 GMT. It finished little changed in the previous session.
Copper prices ended last week higher for the first week in three, gaining around half a percent.
The most-traded January copper contract on the Shanghai Futures Exchange fell 0.4 percent to 51,960 yuan ($8,500) a tonne.
LME nickel, LME zinc and LME lead rose, having hit on Friday the highest in one month for nickel, and around seven weeks each for lead and zinc.
Indonesia, the world's top exporter of nickel ore, has said it plans to bring in a ban on unprocessed ore exports from Jan. 1, 2014, which, matched with output cutbacks, could lift the price of this year's worst-performing base metal by more than 20 percent off multi-year lows, analysts said.
Cash prices for nickel hit the highest against three-month prices in almost one year reflecting increased nearby demand, which a trader said stemmed from one bank buying up stock from several LME warehouse locations. <CMNI0-3>
Supporting metals, China's economy grew at its quickest pace this year between July and September in a rebound fuelled largely by investment, although signs are already emerging that the pick up in activity may lose some vigour.
The dollar was mired near an 8-month low against a basket of currencies on Monday on growing expectations the U.S. Federal Reserve would have to delay scaling back its stimulus following a 16-day government shutdown.
September payrolls numbers, expected two weeks ago, will be released on Tuesday to start a flow of economic data delayed because of the shutdown that ended on Thursday.
Key data from the U.S. Commodity Futures Trading Commission, including the Commitments of Traders reports that shows investor positioning in copper, was not published last week.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin ($1 = 6.0968 Chinese yuan)
(Editing by Joseph Radford and Muralikumar Anantharaman)