* Copper up 3 pct on firm European equities * Chinese GDP and factory output data signal slowdown * Investment banks slash metals forecasts for 2008 and 2009 (Updates prices to mid-session, adds comment) By Anna Stablum LONDON, Oct 20 (Reuters) - Copper rose more than 3 percent on Monday after sharp declines lured buyers back to the market and rising European equities supported prices, but slowing growth in China kept investors on edge. "The metals are trading slightly higher, the U.S. dollar has weakened against major currencies and ... positive developments in the stock market give support to base metals," said consultant Peter Fertig at Dresdner Kleinwort. Three-month copper MCU3 on the London Metal Exchange was up at $4,825 a tonne at mid-session, after rising 3.1 percent to a high of $4,950 earlier. The metal -- often seen as a key gauge of real economic activity -- closed at $4,806 on Friday and on Thursday, copper touched the lowest since January 2006 at $4,545. The dollar weakened against the euro before steadying, making dollar-priced metals cheaper for holders of other currencies and global stock markets bounced as investors took comfort in efforts to prop up the banking system.[ID:nLK260386] Bargain hunting also lifted sentiment with copper prices down by a third in the past three weeks as fears of a world-wide recession sent markets into a tailspin. Prices are down more than 25 percent so far this year. "It looks like the market has stabilised at these low levels -- investors might feel a bit more comfortable now as falling prices mean producers will cut back," an LME trader said. Weak data signalling a slowdown in China capped prices, but analysts said some softness had to do with the Olympic Games. "One has to keep in mind that the Chinese government ordered production to be closed down for the Olympics to improve the air quality and this of course had an impact on GDP growth," said Fertig at Dresdner. "However, Chinese GDP growth is going to slow this year and next year that is obvious -- but the Q3 figures are distorted." China's annual GDP growth fell to 9 percent in the third quarter from 10.1 percent in the second quarter, and factory output dropped to a six-year low. [ID:nPEK312415] China's production of refined copper rose 4.7 percent on the year in September on expanded production capacity in the world's top consumer of the metal. [ID:nHKG287952] SLUGGISH DEMAND OUTLOOK The soft economic outlook prompted Deutsche Bank to slash its commodity forecasts, slicing nearly 40 percent from its 2009 forecast for copper to just $4,161 a tonne. "We now expect global GDP growth to slow to 1.2 percent in 2009. We expect energy and industrial metals will be the major casualties in this environment," the bank said. The report added aluminium MAL3 could fall 16 percent from current prices to average $1,874 next year and nickel MNI3 would average $10,279, 43 percent down from previous forecast. Also Credit Suisse cut its forecasts and the investment bank expected a surplus in copper for next year. "We have cut our '09 demand forecast (in copper) from 4 percent to 1 percent which puts us on track for a potential surplus of 416,000 tonnes assuming supply growth of 3.1 percent," the investment bank said in a report. Sanford C. Bernstein also revised its forecasts downwards, adjusting the figures to slower global economic growth. "We are allowing for 2-2.5 percent global GDP," analyst Andrew Keen at investment management firm Bernstein said. In 2009, copper was seen at $4,200 a tonne, down from a previous forecast at $5,800, Bernstein's report said. In other metals, zinc MZN3 rose 5.9 percent in early trade to touch $1,295 a tonne, before trading $1,258 -- unchanged from Friday. Aluminium MAL3 fell $55 to $2,170, lead MPB3 dropped $41 to $1,419/1,420, nickel MNI3 eased to $10,450/10,500 from $10,750/10,850, while tin MSN3 was last at $13,250/13,255 against $12,900/13,000 on Friday. Metal Prices at 1210 GMT Metal Last Change Pct Move End 2007 Ytd Pct move LME Cu 4835.00 29.00 +0.60 6670.00 -27.51 SHFE Cu* 39210.00 1520.00 +4.03 56880.00 -31.07 LME Alum 2162.00 -63.00 -2.83 2403.00 -10.03 SHFE Alu* 14715.00 445.00 +3.12 18180.00 -19.06 COMEX Cu** 221.00 2.90 +1.33 303.05 -27.07 LME Zinc 1220.00 -5.00 -0.41 2370.00 -48.52 SHFE Zinc* 10690.00 240.00 +2.30 18950.00 -43.59 LME Nick 10400.00 -550.00 -5.02 26350.00 -60.53 LME Lead 1420.00 -40.00 -2.74 2550.00 -44.31 LME Tin 13175.00 -875.00 -6.23 16400.00 -19.66 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Alfred Cang in Shanghai, editing by Peter Blackburn)

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