* Escondida strike, shortcovering boost copper prices 0.5 pct * Former U.S. Fed official urges further monetary easing * Base metals under pressure to correct, traders * Investors eye key U.S nonfarm payroll data on Friday (Updates prices, adds quotes and details) By Carrie Ho SHANGHAI, Aug 4 (Reuters) - LME copper rose on Thursday, fuelled by continued supply fears and short-covering as it recovered from three-week lows struck the previous day after data on the U.S. services sector and factory orders disappointed markets. Remarks by a former U.S. Federal Reserve official on Wednesday urging serious consideration to further monetary easing in the United States also helped lift sentiment. Three-month copper on the London Metal Exchange rose 0.5 percent to $9,575 a tonne by 0708 GMT, after losing 1.5 percent in the last session when it hit a trough of $9,520, the lowest since July 12. The most-active October copper contract on the Shanghai Futures Exchange SCFcv1 fell 0.6 percent to 71,610 yuan per tonne, catching up with overnight losses in London, after drifting up 0.1 percent in the last session. "Copper is under pressure but it's holding up very well, given the uncertainties we have in the global economy. This was on the back of supply concerns over Escondida," said Jonathan Barratt, managing director of Commodity Broking Services. "Once the Escondida strike is resolved, and it will be, then I think copper has quite a way to fall." The strike at the world's top copper mine, Chile's Escondida, which extracts 7 percent of the world's copper, did not end as expected. Workers will vote on Thursday on a bonus offer aimed at ending the 14-day strike that has stoked supply fears and raised the specter of more unrest. Former U.S. Fed Vice Chairman Donald Kohn said on Wednesday the Fed might need to give serious consideration to further easing if the economy weakened more than expected and underlying inflation fell. But other than raising investors' hopes for a third round of quantitative easing, or QE3, the U.S. economy has been sending bearish signals. The pace of growth in the U.S. services sector ticked down unexpectedly in July to the lowest level since February 2010 and the number of jobs created by the private sector also slowed, reports showed on Wednesday. Taken alongside dismal data on the manufacturing sector earlier in the week, the services data showed an economy that was frustrating hopes for a rebound in the second half of the year after a very weak first half. All eyes are now on Friday's nonfarm payrolls data for more clues on where the world's largest economy is headed. "Base metal prices have been volatile due to the global economic uncertainties. This will continue until we have more clarity about the global economy. The market will focus on the U.S. nonfarm payrolls numbers on Friday," Barratt said. All base metals on the LME rose on an average volume-weighted basis by 0.51 percent, after falling across the board in the previous session. "LME base metals are in positive territory today as the dollar index is moving within an expected range of 73.4 to 74.5," said Minmetals Futures analyst Zhuo Gui Qiu. "They are also buoyed by renewed expectations of a QE3 in the US. But they are under pressure to correct in the longer term." The European Union acknowledged on Wednesday that investors now doubt whether the euro zone can overcome its debt crisis. Spain plans to auction up to 3.5 billion euros ($5 billion) of bonds on Thursday as the European Central Bank meets on policy, with investors hoping the ECB will signal a more aggressive approach to fighting the euro zone's debt crisis. The ECB is expected to put its tightening cycle on ice for several months due to the economic slowdown and debt market turmoil. It may even signal a readiness to buy bonds again, a move that could ease pressures in European debt markets and perhaps help the common currency. Base metals prices at 0708 GMT Metal Last Change Pct Move YTD pct chg LME Cu 9575.00 45.00 +0.47 -0.26 SHFE CU FUT OCT1 71610 -450 -0.62 -0.33 LME Alum 2522.25 -1.75 -0.07 2.12 SHFE AL FUT OCT1 18135 -385 -2.08 7.69 HG COPPER SEP1 434.50 3.50 +0.44 -2.13 LME Zinc 2380.00 3.00 +0.13 -3.02 SHFE ZN FUT OCT1 18250 -145 -0.79 -6.29 LME Nickel 23930.00 125.00 +0.53 -3.31 LME Lead 2531.25 9.25 +0.37 -0.74 SHFE PB FUT 16920 -170 -0.99 -7.79 LME Tin 26599.00 299.00 +1.14 -1.12 LME/Shanghai arb 502 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 (Reporting by Carrie Ho; Editing by Clarence Fernandez)

Source