* Greece resumes talks on debt restructuring * China new home prices fall in December * Copper stocks down to fresh 13-month low By Harpreet Bhal and Silvia Antonioli LONDON, Jan 18 (Reuters) - Copper steadied on Wednesday after hitting a 2-1/2 month high in the previous session, with caution about Europe's debt crisis prevailing ahead of Greek debt restructuring talks, although a stronger euro prevented metals from falling. Benchmark copper on the London Metal Exchange (LME) closed at $8,235 a tonne, 0.4 percent up from a close of $8,200 on Tuesday, when it hit its highest level since late October at $8,262. "I think the euro crisis isn't over yet; we'll have more pain so I'd be cautious jumping in now," said INTL FC Stone senior commodity analyst Edward Meir. "The Chinese numbers weren't bad but we know growth is slowing... I think we'll see the market moving sideways in the next few weeks." China's economy expanded more than expected in the latest quarter but it grew at its weakest pace in 2-1/2 years and it appeared headed for an even sharper slowdown in the coming months as export demand fades and the housing market falters. China consumes about 40 percent of the global metals supply and slower growth in the Asian country would dent global demand for industrial metals. In another risk factor for markets, Greece is to return to the negotiating table with its creditors following a breakdown in talks last week. It needs a deal with the private sector within days to avoid going bankrupt when 14.5 billion euros ($18.5 billion) of bond redemptions come due in late March. Helping limit weakness was a rise in the euro to a session high against the dollar, after reports about a possible increase in the International Monetary Fund's lending capabilities and a comment from Fitch saying it does not expect Italy to default. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies. Copper prices fell by around 21 percent last year, its first annual drop since 2008, as an uncertain global economic outlook raised fears about the metal's demand prospects. It is up 7.5 percent so far this month. "With copper now trading back above $8,000, sentiment is turning and the question has flipped to 'how high can copper rise'?" Credit Suisse said in a note. "Over the longer-term, we would argue that copper prices still have significant upside potential given the prevailing undervaluation and the poor supply outlook," the analysts said, adding they expect to see some profit-taking in the short term. CHINA CONCERNS Investors' focus remained on the prospects for demand from top consumer China on growing concerns about the country's economic outlook and as business slows ahead of the Lunar New Year holiday at the end of January. Data on Wednesday showed China's new home prices fell for a third straight month in December and may drop further as Beijing sticks to its campaign to bring housing costs back to levels that the government considers reasonable. "Our economists are also expecting China to cut its reserve requirement ratio for banks sometime this week, and weak property prices could be a catalyst for this event," ANZ analysts said in a note. Copper stocks in LME-registered warehouses continued to show a falling trend, dropping by 925 tonnes to a fresh 13-month low. In industry news, Freeport-McMoRan Copper & Gold's Indonesian unit has restarted copper concentrate shipments to a smelter on Java island, a company official said on Wednesday, after workers ended a three-month strike last month. In other metals, aluminium closed at $2,204 from a close of $2,227 a tonne on Tuesday. Norwegian aluminium producer Norsk Hydro will close one of three production lines at its Kurri Kurri plant in Australia, taking 60,000 metric tonnes a year off the weak metals market. The company said it was forced to act because of "the weak macro-economic environment, with low metal prices and uncertain market outlook". Zinc, used in galvanising finished at $2,001, unchanged from Tuesday's close, while tin closed at $21,780 from $21,725. Battery material lead ended at $2,139 from $2,108 and stainless steel ingredient nickel at $19,495 from $19,525.

Source