MARKETS-METALS (UPDATE 5) * China denies it is reviewing euro-zone bond holdings * U.S. economic growth revised downwards * Coming up: U.S. April personal income due Friday (Updates after U.S. GDP data) By Maytaal Angel LONDON, May 27 (Reuters) - Copper rose on Thursday as fears about euro zone debt eased and as investors eyed a bounce in the euro and gains in wider financial markets including oil and equities. Benchmark copper on the London Metal Exchange was trading at $6,885 a tonne at 1319 GMT from a close of $6,779 on Wednesday. Prices of the metal used in power and construction hit a high of $6,937.75 earlier on Thursday. The euro rose on Thursday after Chinese officials denied a report that Beijing may distance itself from bond holdings from the euro zone, which has been afflicted by debt problems in Greece and other countries. "It looks like the market is bottoming out. Macro data yesterday was positive," said Andrey Kryuchenkov, analyst at VTB Capital. "People are saying 'hang on, Europe aside, things are improving elsewhere'...spot premiums are high." A stronger euro makes metals cheaper for European investors. However, copper prices retreated as the dollar trimmed its losses after data showed weekly U.S. jobless claims fell in the latest week. Also slightly undermining sentiment was data showing the U.S. economy grew at a slower pace than previously estimated in the first quarter as business investment slackened. Part of the reason behind the downward revision in gross domestic product growth was news that state and local government curbed spending at the steepest rate since 1991. European shares rose to a one-week high on Thursday, with sentiment lifted by China's denial it was reviewing its investments in euro zone debt, and as Prudential rose on talk its deal with AIG may be off. UNDERLYING Overall, though analysts are optimistic about demand for industrial metals. "The outlook for the underlying real economy remains positive with demand for industrial metals expected to increase strongly. The OECD's latest economic forecasts back up this view," Standard Bank said in a note. "The main area of concern, however, remains whether the problems in southern Europe can be contained. If the metals can detach themselves and instead focus on the real economy, the outlook remains positive." Indicating still good demand, LME copper stocks fell 1,275 tonnes to 477,775 tonnes, their lowest point since December, while aluminium stocks dropped 3,525 tonnes to 4.56 million tonnes, having fallen consistently since last Wednesday. Although total aluminium stocks remain near record highs, most of the material is tied up in financing deals and is unavailable to the market. As a result, spot premiums for physical aluminium are rising. Aluminium traded at $2,020 from $2,015, zinc at $1,890 from $1,890, while battery material lead traded at $1,780 from $1,755, having earlier risen nearly 5 percent to $1,834. Tin was at $17,700 from $17,575, and nickelwas at $21,355 from $21,115. Metal Prices at 1309 GMT Metal Last Change Percent Move End 2009 Ytd Percent move LME Alum 2020.00 5.00 +0.25 2230.00 -9.42 LME Cu 6875.00 96.00 +1.42 7375.00 -6.78 LME Lead 1775.00 20.00 +1.14 2432.00 -27.01 LME Nickel 21260.00 145.00 +0.69 18525.00 14.76 LME Tin 17625.00 50.00 +0.28 16950.00 3.98 LME Zinc 1885.00 -5.00 -0.26 2560.00 -26.37 SHFE Alu 15260.00 15.00 +0.10 17160.00 -11.07 SHFE Cu* 55320.00 430.00 +0.78 59900.00 -7.65 SHFE Zin 15865.00 75.00 +0.47 21195.00 -25.15 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Pratima Desai;Editing by Anthony Barker and Sue Thomas)

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