* Market reacts to S&P statement on Greece * China local debt woes, rate hike talk back in the market * Moody's says it may downgrade China banking system outlook * U.S. Factory orders & durable goods, May; 1400 GMT (Updates prices, adds quotes and details) By Carrie Ho SHANGHAI, July 5 (Reuters) - LME copper fell on Tuesday as sentiment soured on talk of China's worrisome local debt burden and a warning by ratings agency Standard & Poor it would treat a French bank plan for a rollover of privately-held Greek debt as a default. Three-month copper on the London Metal Exchange edged down to $9,445 a tonne by 0416 GMT, after ticking up slightly in the last session. The most-active September copper contract on the Shanghai Futures Exchange fell 0.5 percent to 70,390 yuan per tonne, after finishing nearly 1.3 percent higher previously. S&P cast new uncertainty on Monday over euro zone efforts to rescue debt-crippled Greece. The threat abruptly ended a relief rally in stock and bond markets after Greece adopted a new, tougher austerity plan last week, prompting euro zone finance ministers to agree on Saturday to throw Athens a 12 billion euro short-term lifeline. "There is a combination of factors causing a negative turn in sentiment besides the S&P statement. Chinese equities are a bit down now, while investors are also feeling bearish over Moody's statement that it may downgrade the outlook on China's banking system over the local government debt issue," said Shanghai CIFCO Futures analyst Zhou Jie. "The U.S. dollar has firmed, putting some pressure on commodities. Also, the current high price of copper may cause spot demand to slow faster ahead of the slow summer season in China," he added. Chinese media reports about a possible rate rise in China this weekend, as well as a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought, also weighed on risk appetite and supported the dollar. The euro was set to snap its six-day winning streak on Tuesday, coming off near one-month highs against the dollar as the greenback was bought back broadly on a flurry of stop-loss buying and short-covering by macro-funds. On a more positive note, HSBC Purchasing Managers' Index for China's fledgling services sector fell slightly in June but still pointed to solid business expansion as new order growth quickened to an eight-month high. Bank of Japan Governor Masaaki Shirakawa said the world economy continues to recover albeit at a slower pace, taking a slightly more cautious view on global growth as signs of a slowdown spread to emerging economies. A fall in the cost of energy pushed down industrial producer prices slightly in the euro zone in May from the previous month, data showed on Monday, just days after the ECB signalled it will raise interest rates again this week. Base metals prices at 0416 GMT Metal Last Change Pct Move YTD pct chg LME Cu 9445.00 -10.00 -0.11 -1.61 SHFE CU FUT SEP1 70390 -380 -0.54 -2.03 LME Alum 2508.00 -2.00 -0.08 1.54 SHFE AL FUT SEP1 17340 -35 -0.20 2.97 HG COPPER SEP1 429.90 -1.15 -0.08 -3.16 LME Zinc 2380.50 -17.50 -0.73 -3.00 SHFE ZN FUT SEP1 18050 -50 -0.28 -7.32 LME Nickel 23150.00 -25.00 -0.11 -6.46 LME Lead 2665.00 -19.00 -0.71 4.51 SHFE PB FUT 17260 -90 -0.52 -5.94 LME Tin 25600.00 -50.00 -0.19 -4.83 LME/Shanghai arb 1044 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month Shanghai lead launched on March 24

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