METALS-Copper firms after earlier losses, China policy a concern

* LME copper recovers from two-week low

* Gains expected to be limited

* China end-use demand slow to recover after holiday -CRU

* Coming up: U.S. new home sales at 1500 GMT

(Updates prices, adds analyst comment, changes dateline from Sydney) LONDON/SYDNEY, Feb 26 (Reuters) - London Metal Exchange (LME) copper firmed on Wednesday, recovering from a two-week low hit earlier in the week, but worries about credit curbs on China's property developers fed into wider concerns about global demand for the metal. China accounts for more than 40 percent of global consumption of copper, which is used extensively in construction and power cables. Any curbs to financing and property development are likely to erode that demand. Three-month copper on the LME was $7,079 a tonne at 1041 GMT, from a close of $7,064.50 on Tuesday. It sank to its lowest level in more than two weeks on Monday at $7,033 a tonne.

"The gains we are seeing in copper are nothing more than a technical bounce from its support," Ava Trade analyst Naeem Aslam said, adding that Chinese banks withdrawing support for the property sector could pose a serious threat. The official Shanghai Securities News reported on Monday that Industrial Bank and other banks may have stopped extending some loans to property developers and tightened lending to other property-related sectors, such as steel, cement and construction. The most-traded May copper contract on the Shanghai Futures Exchange fell to 49,280 yuan ($8,000) a tonne, its lowest since Aug. 7, before recovering to 49,680 yuan ($8,100), down 0.22 percent. China's corporate debt has hit record levels and is likely to accelerate a wave of domestic restructuring and trigger more defaults as credit repayment problems rise. The appeal of copper imports, often used to finance property investments, were also blunted by falling property prices, said Chunlan Li, an analyst at Beijing-based consultancy CRU. "Worries about risks to the Chinese economy are pushing prices down. At the same time, demand has not resumed after the holiday - operating rates at end users are still not very good," she said. A metals broker in Hong Kong, meanwhile, said that traders are waiting for the right price, with more buying interest possible if prices touch $7,000 again. For now, however, traders have shown limited appetite for physical metal in China. Stockpiles have jumped because of record January imports and premiums for metal in bonded warehouses fell by $5 this week to $160-$180, according to China price provider Shmet. (http://www.shmet.com/) Raising more doubts over demand for industrial metals, U.S. home price gains slowed in December, according to a closely watched housing survey on Tuesday that underscored a loss of momentum in the housing recovery. More U.S. property data is due later in the session, with new home sales watched for further signals on the health of the world's largest economy. PRICES 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 = 6.1266 Chinese yuan)

(Editing by David Goodman)