* Supply risks aiding copper, but impact seen short-lived * Euro zone, U.S. debt default fears limit rise * Coming Up: U.S. NAHB housing market index; 1400 GMT (Adds details) By Manolo Serapio Jr SINGAPORE, July 18 (Reuters) - Copper edged higher on Monday, supported by near-term supply risks although a cloudy outlook for global demand limited gains. London copper rose for a third straight week last week with a modest 0.1 percent gain as concerns that ranged from debt default fears in Europe and the United States to a struggling global economic recovery kept gains in check. "Even if some market participants see good value in buying at current levels, this litany of downside risks appears to be tempering price growth," said Ben Westmore, commodity economist at National Australia Bank. Eight European banks failed a test of their ability to withstand a long recession as authorities worked to prevent the European debt crisis from spreading, while U.S. President Barack Obama and lawmakers remained in search of a way to lift the U.S. debt ceiling to avoid a default next month. Congress must raise the $14.3 trillion limit on the United States' borrowing by Aug. 2 or the government will run out of money to pay its bills, possibly causing turmoil in global financial markets. Three-month copper on the London Metal Exchange rose $21 to $9,693 a tonne by 0340 GMT. In Shanghai, the most-traded September copper contract SCFcv1 gained 0.8 percent to 72,190 yuan a tonne. Copper was relatively steady the past week despite more signs of weakness in the U.S. economy as investors were hesitant in driving the price lower at a time when weather and labour issues threatened to further tighten global supplies. A once in half a century winter storm hit mining operations in the northern part of top producer Chile this month, forcing more than half a dozen mines to halt operations or slow mining after dirt roads at their open pit operations became dangerously slippery. "If we do get further rain and there are continued outages in Chile, it makes what is already a significant global deficit in the copper physical market even worse," Westmore said. "But I think the price gains based on that will be limited by the foggy outlook for demand." Copper, up a modest 1 percent for the year after failing to sustain a rally to record highs in February, is likely to be stuck in tight ranges for the rest of 2011 unless demand picks up strongly, said Westmore. Data on Friday offered more signs of weakness in the U.S. economy with consumer confidence hitting a near 2-1/2 year low in early July and manufacturing output stalling in June. LME aluminium edged up 0.3 percent to $2,502 a tonne. Daryl Guppy, chief executive of Guppytraders.com, said aluminium is in a "long-term down sloping triangle." "Support near $2,480 has been consistently tested. Price must move above $2,560 before an uptrend breakout can develop. All other price rise activity is short-term rally behaviour," said Guppy. Base metals prices at 0340 GMT Metal Last Change Pct Move End 2010 YTD pct chg LME Cu 9693.00 21.00 +0.22 9600.00 0.97 SHFE Cu* 72190.00 570.00 +0.80 71850.00 0.47 LME Alum 2502.00 8.00 +0.32 2470.00 1.30 SHFE Alum* 17580.00 155.00 +0.89 16840.00 4.39 COMEX Cu** 440.50 0.00 +0.00 443.95 -0.78 LME Zinc 2390.00 15.00 +0.63 2454.00 -2.61 SHFE Zinc 18440.00 180.00 +0.99 19475.00 -5.31 LME Nickel 24130.00 -25.00 -0.10 24750.00 -2.51 LME Lead 2705.00 -3.00 -0.11 2550.00 6.08 LME Tin 27200.00 0.00 +0.00 26900.00 1.12 LME/Shanghai arb^ 1146 Dollar/yuan 6.4666 \ 6.4668 ** 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 third month

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