MARKETS-METALS (UPDATE 3) * Euro rebounds but sentiment still fragile * Market still worried about China tightening * Coming up: U.S. factory orders for April, due at 1400 GMT (Recasts, adds comment/details, changes dateline from SINGAPORE) By Maytaal Angel LONDON, June 3 (Reuters) - Copper prices recovered on Thursday as a bounce in global equity markets boosted confidence, but gains were held in check by lingering worries over European debt and China tightening measures. Benchmark copper for three-months delivery on the London Metal Exchange traded at $6,752 a tonne at 0843 GMT from a close of $6,665 on Wednesday, when prices of the metal used in power and construction hit a near two-week low of $6,560. Equities, seen by some as a proxy for growth, jumped in Asia and Europe after U.S. housing data fuelled optimism about the world's largest economy and eased worries over the global impact of Europe's debt crisis. "U.S. markets went shooting up last night which has been taken very positively but some of those numbers, especially housing, were inspired by a tax credit that runs out this month," said Evolution Securities analyst Charles Kernot. "Markets needed a bit of a bounce psychologically but I don't think many of the underlying issues have been taken away. Euro zone problems remain in place. In China, the rate of increased demand for metals is going to slow." The euro climbed versus the dollar as the rebound in equities lent support to higher yielding currencies, but sentiment remained fragile, with concerns over Europe's debt crisis lurking in the background. A weak euro makes metals costly for European investors. Investors awaited the release of non-farm U.S. payrolls data on Friday, which is expected to show 513,000 jobs added to the economy in May. This could potentially boost the dollar. CAUTIOUS "I don't see a strong rebound. Sentiment is cautious after the correction in the past few weeks," Barclays Capital analyst Yingxi Yu said. "Metals are still being weighed down by concerns about China -- those are probably more important than the crisis in Europe, but growing uncertainty about the global economy may delay Chinese efforts to slow growth and that may be positive." Data on Tuesday pointed to a slowdown in the pace of manufacturing activity in China, the world's top metals consumer, as gradual policy tightening took a toll on new orders. On the supply side, copper was lifted by news that output at Xstrata's Ernest Henry mine would halve to 25,000 tonnes per year under a plan to halt expansion work due to Australia's proposed new mining tax. Also helping copper, LME stocks, a signal of demand trends, continued to decline, dropping 925 tonnes to 474,300 tonnes, their lowest since December last year. Among other industrial metals, aluminium was at $2,008 a tonne from $1,985, but technicals pointed to a slightly weaker market, targeting $1,920 for as long as the market holds below $2,025. Zinc was at $1,810.25 from $x1,801, while battery material lead was at $1,717.25 from $1,696. The two metals hit nine- and 10-month lows respectively on Wednesday. "Lead is heavily exposed to battery markets. People are positive on global car demand but if I was sitting in Greece or Spain I wouldn't buy a new car. Zinc is also exposed to the auto industry," said Kernot. Soldering metal tin was at $17,775 from $17,650, and stainless steel making ingredient nickel was at $20,110 from $19,650. Metal Prices at 0846 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 305.65 1.60 +0.53 334.65 -8.67 LME Alum 2002.00 17.00 +0.86 2230.00 -10.22 LME Cu 6746.00 81.00 +1.22 7375.00 -8.53 LME Lead 1710.00 14.00 +0.83 2432.00 -29.69 LME Nickel 20060.00 410.00 +2.09 18525.00 8.29 LME Tin 17575.00 -75.00 -0.42 16950.00 3.69 LME Zinc 1805.00 4.00 +0.22 2560.00 -29.49 SHFE Alu 14955.00 20.00 +0.13 17160.00 -12.85 SHFE Cu* 53900.00 500.00 +0.94 59900.00 -10.02 SHFE Zin 15090.00 -120.00 -0.79 21195.00 -28.80 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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