* LME copper lifted by short-covering gains on ShFE - trader * Greeks warming up to pro-bailout parties - poll * Spain borrowing costs spike,banks suffer credit rating cut * U.S. CFTC commitment of traders data due at 0930 GMT By Carrie Ho SHANGHAI, May 18 (Reuters) - London copper peeked above four-month lows on Friday on short-covering and signs that Greeks are warming to pro-austerity parties, allaying some fears the country could leave the euro zone. Still, worries about Spain's finances and reports of Chinese copper inflows onto the London Metal Exchange (LME) will likely cap gains in the session. Three-month LME copper inched up $1 to $7,650 a tonne by 0712 GMT, after closing almost flat in the previous session. It is on track to post a weekly drop of 4.6 percent, its third consecutive week of losses. The most active August copper contract on the Shanghai Futures Exchange (ShFE) fell 0.4 percent to close at 55,520 yuan ($8,800) a tonne, a partial rebound after a steeper fall at the open. The Shanghai contract rose 1.9 percent on Thursday, much more than its London counterpart, after diving on Wednesday to its cheapest since Dec. 20. Compared with last week, it fell 3.4 percent, its third consecutive weekly loss. "LME copper started rising after bouts of short-covering on the ShFE this morning ... I think this triggered the metal's upward momentum and helped lift London prices," said a Shanghai-based trader with an international firm. "London copper is also tracking the rise of base metals like aluminium, zinc and lead, which started floating higher since yesterday. Those metals are trading closer to their marginal production cost than copper, so they have rebounded faster," he added. Copper prices may also have been weighed down this week by a hefty inflow into LME warehouses from China. Traders said China's smelters and merchants may have added around 110,000 tonnes to LME warehouses in South Korea. The exports came just two weeks after the trading unit of Jiangxi Copper Co Ltd , China's top producer, said a group of copper smelters as well as trading firms would export refined copper cathodes to LME to help ease tight global supplies and trim near-record stockpiles at home. Regarding the euro zone, a poll showing Greek voters returning to pro-bailout parties helped improve sentiment ahead of a snap election in Greece next month, which many still fear could empower anti-austerity leftists and prompt Greece to quit the euro. Separately, a German Bundesbank board member told Reuters that euro zone banks are in better shape than before the financial crisis, and that those in Germany are equipped to cope with Greece taking a turn for the worse. Any price gains in the session will be fragile in light of China's soft downstream demand and high stockpiles, as well as the debt issues clouding the euro zone, analysts said. "In the longer term, copper is weighed down by still-lacklustre demand and still-high stockpiles in China. Many smelters are losing money, and while ShFE inventories have pared over the past few weeks, stocks are still higher than they have been over the past few years," said Minmetals Futures analyst Zhang Ao. CU-STX-SGH "But the next turning point for copper prices, either a decisive rise or fall, will really be determined by macroeconomic events, especially from the euro zone," he added. Even as investors were able to take a brief respite from fears of a Greek default, bad news in Spain - the euro zone's fourth-largest economy - illustrated Europe's dire economic situation. Spain's borrowing costs spiked at a bond auction on Thursday, while shares in its troubled lender Bankia dived as 16 other banks suffered a credit ratings cut. Official data also confirmed that the country was back in recession. Contributing to investor caution was the high number of new claims for U.S. jobless benefits last week, which suggested sluggish growth in hiring. Factory activity in the mid-Atlantic region also contracted in May, worrisome signs for a still-fragile economic recovery. Base metals prices at 0712 GMT Metal Last Change Pct Move YTD pct chg LME Cu 7650.00 1.00 +0.01 0.66 SHFE CU FUT AUG2 55520 -210 -0.38 -0.20 LME Alum 2047.50 -6.50 -0.32 1.36 SHFE AL FUT AUG2 16020 -20 -0.12 1.14 HG COPPER JUL2 346.25 -1.65 -0.47 0.77 LME Zinc 1893.00 -7.00 -0.37 2.60 SHFE ZN FUT AUG2 14855 -120 -0.80 0.41 LME Nickel 17032.00 -163.00 -0.95 -8.97 LME Lead 1938.50 11.50 +0.60 -4.74 SHFE PB FUT 15075 -195 -1.28 -1.41 LME Tin 19150.00 -50.00 -0.26 -0.26 LME/Shanghai arb 1127 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month ($1 = 6.3252 Chinese yuan)

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