* LME-SHFE copper arbitrage at over 400 yuan * Asian shares stable after overnight losses in equities * Chinese copper demand looks steady for the rest of the year, analyst * U.S. PPI inflation yy, NSA, July; 1230 GMT (Updates prices, adds quotes and details) By Carrie Ho SHANGHAI, Aug 17 (Reuters) - LME copper bounced up on Wednesday lifted by arbitrage trading, relative calmness in the Asian equities market and general optimism about China's metals consumption for the rest of the year. But worries about the debt crisis and slowing growth in the euro zone will likely limit price rises. Three-month copper on the London Metal Exchange rose 0.6 percent to $8,880 a tonne by 0422 GMT, after losing 0.9 percent in the previous session. The most-active November copper contract on the Shanghai Futures Exchange SCFc3 rose 0.5 percent to 66,800 yuan per tonne, after falling 1.2 percent in the last session. Asian shares rose 2.6 percent despite overnight falls in equities after France and Germany failed to live up to market expectations for a solution to Europe's debt crisis. Traders reported some arbitrage deals with the LME third month contract trading at a 419 yuan discount to the SHFE most active contract, taking into account China's 17 percent VAT. "Asian stocks look quite stable today. Copper and other base metals have come to a point where it's hard to fall or rise too far before we see a technical rebound or correction. With global uncertainties, prospects of tightening in China and no big disruptions in supply, there are limits to price rises," said CIFCO analyst Zhou Jie. "Whereas the fact that prices have fallen quite a bit over the past few weeks and China's continued GDP growth have put a floor on prices too. After the destocking in base metals in China earlier this year, there should be some restocking for the rest of the year if the economy continues to grow at this rate." The Shanghai Metals Market said in a recent note it saw steady demand for copper from makers of water pipes and seawater desalination pipes despite a seasonal downturn in demand for airconditioning pipes. August copper orders may decline slightly from July's levels but will stay stable, it added. The euro zone economy slowed sharply in the second quarter, hobbled by sluggish growth in Germany and stagnation in France, raising fears of a longer-term dip that could derail efforts to resolve the bloc's debt crisis. The picture was equally grim for the region's high debtors -- particularly Greece, Italy, Spain, Portugal and Ireland -- where little or no growth means debt-cutting targets will be even harder to achieve as tax revenues shrink and welfare payments rise. Fitch Ratings on Tuesday confirmed the United States' top-notch credit rating and, in blatant disagreement with rival Standard & Poor's, gave a vote of confidence to Washington's deficit-reduction efforts. U.S. industrial output recorded its best gain in seven months in July as the auto sector bounced back from supply disruptions wrought by Japan's devastating earthquake in March. Base metals prices at 0422 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8880.00 50.00 +0.57 -7.50 SHFE CU FUT NOV1 66800 310 +0.47 -7.03 LME Alum 2380.25 5.25 +0.22 -3.63 SHFE AL FUT NOV1 17245 95 +0.55 2.40 HG COPPER SEP1 401.40 -3.75 +0.50 -9.58 LME Zinc 2189.00 8.00 +0.37 -10.80 SHFE ZN FUT NOV1 16920 415 +2.51 -13.12 LME Nickel 21650.00 -50.00 -0.23 -12.53 LME Lead 2374.00 18.00 +0.76 -6.90 SHFE PB FUT 16660 135 +0.82 -9.21 LME Tin 24100.00 -50.00 -0.21 -10.41 LME/Shanghai arb -419 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Reporting by Carrie Ho; Editing by Sugita Katyal)

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