METALS-Copper dips as tepid China demand offsets tight supply
* New Fed head Yellen expected to reiterate monetary easing
* In lead market, China extends electric car subsidies
* China commodities imports likely to have fallen in January
(Updates with official closing prices)
LONDON, Feb 10 (Reuters) - Copper dipped on Monday, following a weekly rise that was the biggest so far this year last week, as worries about demand in top consumer China and expectations of tighter U.S. monetary policy offset tightness in supply.
Three-month copper on the London Metal Exchange fell 0.64 percent to $7,095 a tonne at the close. Prices last week recouped 1 percent but were still down some 3 percent for the year to date.
Chinese imports of major commodities are likely to have fallen in January as buyers wound down their activities ahead of the Lunar New Year holiday amid wider concerns about a slowdown in economic growth this year.
Markets in China, which consumes some 40 percent of the world's copper, reopened on Friday following the week-long Lunar New Year holiday, but have yet to spring back into life and boost copper.
U.S. Federal Reserve Chairwoman Janet Yellen will deliver her first testimony to lawmakers on Tuesday. Analysts generally expect her to reiterate that a further gradual tapering of the monetary stimulus programme is likely, despite poor U.S. jobs data, which emerged on Friday.
On the plus side, however, daily LME data showed copper stocks fell to 306,400 tonnes, the lowest since December 2012 and less than half the level at last June's peak of 678,225 tonnes. <MCU-STOCKS>
Signs of stress are accelerating in the physical market, with LME cash copper trading $48.50 higher than the benchmark contract on Friday, up by $17.50 from the end of January <MCU0-3>.
"I think the Fed continues to aim to come out of quantitative easing by mid to late 2014, (but) spreads are tight, so I think the flat price will be range-bound for the next few weeks, until we get a better sense of what China is doing," Societe Generale analyst Robin Bhar said.
Metals were battered by soft industrial demand in January. All have now fallen since the start of 2014 as a slowdown in China's factories stretched into the new year and a bitter North American winter cast a chill over a nascent economic revival.
Hedge funds and money managers switched the copper markets into net short or sell positions of 6,832 lots in the week to Feb. 4, its shortest since the week of Dec. 8, data from the CFTC showed on Friday.
But an increase in the copper price since the last reporting date suggests some of the short positions have been covered, analysts from Commerzbank said in a note.
In other metals, lead fell 0.76 percent to $2,103 a tonne at the close, bringing the year's losses to more than 5 percent.
China said it would extend a programme of subsidies for buyers of electric-powered vehicles after the current subsidy regime expires in 2015, which should provide some support to lead.
LME aluminium fell 1.1 percent to $1,701 a tonne but has recovered roughly 1.8 percent from 4-1/2 year lows hit one week ago.
Higher global prices may make it more attractive for aluminium product makers in China that are exempt from China's 17 percent export tax, and instead are eligible for tax rebates of around 15 percent, to export their products to international markets, a trader said.
LME tin closed almost flat at $22,200 a tonne, while nickel rose 0.42 percent to $14,200 a tonne.
LME zinc was not traded at the close but was bid down 0.59 percent at $2,010 a tonne.
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 = 6.0634 Chinese yuan)
(Additional reporting by Melanie Burton and Alexander Winning.)