* LME drifts lower, near $7,000, ShFE firm;equities underpin * China reassures on euro zone debt, denies talk of review * Coming Up; US Chicago PMI: 1345 GMT By Nick trevethan SINGAPORE, May 28 (Reuters) - London copper futures drifted lower on Friday, having touched a two-week high above $7,000 earlier in the day following a near-3 percent surge in the Dow Jones Industrial average in the previous session. U.S. stocks rallied on Thursday as investor worries were eased after China denied a report that it was reviewing its euro-zone bond holdings due to the region's debt crisis. [.N] The euro also steadied at a higher level, benefiting from a short-covering bounce after China's assurances. [USD/] "We probably have a few more up days to go. The market is less panicky with equities leading," MF Global analyst Edward Meir said. "That's where sentiment is being collected, sifted, and from where it permeates to the other markets. But instead of a v-shaped recovery back to the old highs or another steep sell off, I expect a trading range to develop for the rest the year." Meir pegged copper shifting between $6,230 on the downside and $7,500 at the top. He expects aluminium to shift between $1,900 and $2,350. But a modest 0.1 percent easing in Dow Jones equity futures DJc1 weighed on copper CMCU3, which fell $21 to $6,963 by 0316 GMT. Earlier, prices touched a two-week high of $7,007. Copper is on track for a 2 percent rally this week, its biggest in almost two months. On the last trading day of May -- UK markets are shut on Monday for a holiday -- LME copper is 6 percent weaker on the month. Benchmark third-month Shanghai copper SCFc3 rose 0.8 percent to 55,770 yuan Aluminium CMAL3 was flat at $2,065. Stocks of the metal in LME warehouses edged lower -- down 3,525 but remained above 4.5 million tonnes. However, rising interest rates, high storage costs and a smaller contango meant material was being pulled off exchange. "Financed material is being taken off the LME and stored elsewhere," an industry analyst in Sydney said. "In part because of the narrowing of the contango, but I also expect a lot of these deals were done in the dark days of the GFC when counterparty was such a risk and lenders wanted an LME warrant." For a related graphic on aluminium contango, click: here Base metals prices at 0316 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 6963.00 -21.00 -0.30 7375.00 -5.59 SHFE Cu* 55770.00 450.00 +0.81 59900.00 -6.89 LME Alum 2065.00 0.00 +0.00 2230.00 -7.40 SHFE Alum* 15425.00 165.00 +1.08 17160.00 -10.11 COMEX Cu** 315.15 7.80 +2.54 332.75 -5.29 LME Zinc 1946.75 6.75 +0.35 2560.00 -23.96 SHFE Zinc 16000.00 135.00 +0.85 21195.00 -24.51 LME Nickel 21650.00 -150.00 -0.69 18525.00 16.87 LME Lead 1850.00 6.00 +0.33 2432.00 -23.93 LME Tin 0.00 -17990.00 -100.00 16950.00 -100.00 LME/Shanghai arb^ -128 Dollar/yuan 6.8300 \ 6.8306 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE

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