* Premier Wen confident of euro zone surviving debt crisis * Signs of pickup in Chinese spot copper demand wane * Tightness emerges in nearby LME aluminium, lead By Eric Onstad LONDON, Aug 30 (Reuters) - Copper broke a three-day losing streak on Thursday after the Chinese premier voiced confidence in the euro zone and on growing confidence that the European Central Bank will take action to combat the debt crisis, though gains were limited ahead of Friday's speech by the U.S. Federal Reserve chairman. Copper flipped from losses during early Asian trading into positive territory after Chinese Premier Wen Jiabao said he was confident the euro zone could pull out of its debt crisis, adding that China was willing to buy more EU government bonds. Also, an Italian bond auction saw the yield on a new 10-year bond fall to the lowest since March, underscoring confidence that the ECB will reveal details of a beefed-up bond buying programme next week in a bid to help lower borrowing costs for Spain and Italy. But most investors were content to wait for a speech by U.S. Fed Chairman Ben Bernanke at a conference in Jackson Hole, Wyoming, on Friday, which is seen as pivotal to market expectations over the central bank's next move. "The Italian bond auction went well, that was reassuring and we don't think (Bernanke) will disappoint, there's too much riding on it one way or another," said INTL FCStone analyst Ed Meir. He added: "Commodities are perking up because of this synchronised global easing that people are expecting." Three-month copper on the London Metal Exchange rose 0.87 percent to $7,641 per tonne at 1355 GMT, snapping three sessions of losses. Copper, which is down 13 percent from a year peak hit in February, has been trapped in a range of $7,300-$7,700 during August in low volumes. Open interest fell again to 220,242 lots, a fresh low since December 2006. U.S. data out earlier showed the world's largest economy is still facing a tepid recovery. The number of Americans filing new claims for jobless benefits missed market expectations to remain unchanged last week, while U.S. consumer spending in July rose the most in five months. Helping copper however, the euro was up versus the dollar as investors waited to see if Bernanke delivers firmer hints on more monetary easing. A stronger euro makes dollar-priced metals cheaper for European investors. "The policy meetings over the next few weeks, starting with Jackson Hole this weekend then ending with the FOMC meeting on September 13th, look set to govern market sentiment and direction. Given the lack of fundamental support, (copper) remains vulnerable to the sort of sell-off seen this time last year, should policy makers disappoint again," said Standard Bank in a note. Elsewhere, traders said Chinese premier Wen's comments on the eurozone helped offset some of the bearishness which pervaded the market after China's top planning agency said the economy was slowly stabilising, dashing hopes for more aggressive stimulus measures by the government. ALUMINIUM, LEAD NEARBY TIGHTNESS Macquarie analyst Duncan Hobbs said after the Jackson Hole meeting, metals markets might return their focus to weak fundamental demand from top metals consumer China. "There had been anticipation that there would be an upturn in the Chinese market in the final months of the year, but now maybe some of that hope is evaporating." Physical demand for copper slackened in China, where the premium for the spot copper price over the prompt September month contract narrowed to 45 yuan on Wednesday, state-backed research firm Minmetal Futures said in a note on Thursday. Premiums were at around 100 yuan last week. The narrowing spread is a sign that the recent spurt of spot purchases by smelters and speculators has failed to prop up the market amid poor demand from copper end-users, traders said. In other metals, nearby spreads tightened in aluminium and lead. This was "stoking fears of a potential squeeze scenario on the horizon," Sucden Financial said in its evening note. The September-October aluminium spread tightened to a backwardation of $1.50 compared with a contango of $12.50 about two weeks ago. Three-month aluminium fell 0.25 percent to $1,888.25 a tonne. In lead, the September-October spread went into a backwardation of 50 cents versus a contango of $3 a week ago. Three-month lead was at $1,968.75, down 0.37 percent from Wednesday's close. Zinc traded down 0.08 percent at $1,854.50 a tonne, nickel down 0.06 percent at $16,290 and tin extended losses after its sharp fall on Wednesday, slipping 0.84 percent to $19,455. Metal Prices at 1401 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 348.15 3.35 +0.97 334.65 4.03 LME Alum 1890.50 -2.50 -0.13 2230.00 -15.22 LME Cu 7624.00 49.00 +0.65 7375.00 3.38 LME Lead 0.00 -1976.00 -100.00 2432.00 -100.00 LME Nickel 16360.00 60.00 +0.37 18525.00 -11.69 LME Tin 19355.00 -265.00 -1.35 16950.00 14.19 LME Zinc 1856.00 0.00 +0.00 2560.00 -27.50 SHFE Alu 15415.00 -5.00 -0.03 17160.00 -10.17 SHFE Cu* 55790.00 410.00 +0.74 59900.00 -6.86 SHFE Zin 14775.00 30.00 +0.20 21195.00 -30.29 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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