* Firmer euro supports
* China traders report seasonal demand pickup ahead of Oct
holidays
* Coming up; U.S. ISM Manufacturing PMI at 1400
GMT
(Updates prices)
By Melanie Burton
SINGAPORE, Sept 4 (Reuters) - London copper edged lower on
Tuesday on signs of flagging growth in top metals consumer
China, though prices were supported by enduring hopes the
European Central Bank (ECB) will this week kick off a round of
global easing.
At an ECB meeting on Thursday, President Mario Draghi is
widely expected to announce steps to support borrowing costs for
struggling European nations. He told European lawmakers on
Monday that purchases of short term sovereign bonds by the ECB
would not breach European Union rules.
"If (the ECB) came out with something that was pretty
concrete - that they were going to buy bonds - then that would
be a big trigger that people would get pretty bulled up on ...
but equally if they don't do too much of anything, it could pile
on some more pressure," said Credit Suisse metals analyst Ivan
Szpakowski.
He added that expectations were growing that the People's
Bank of China (PBOC) would need to take more decisive action to
spur growth, helping to support metals.
"As for the PBOC ... expectations are that they'll get more
aggressive, maybe another RRR cut or even a rate cut, but I
don't see anything in terms of major policy changes ahead of the
leadership changeover in October."
Three-month copper on the London Metal Exchange was
trading at $7,650.50 a tonne by 0337 GMT, dropping 0.36 percent
and reversing gains logged the previous session, when it hit a
one-week high of $7,700.
Prices are reaching the top of a range held since late July,
with a break above $7,720, the Aug.23 peak, likely to spark
further chart-based buying.
The most-traded December copper contract on the Shanghai
Futures Exchange slipped 0.28 percent to 56,020 yuan
($8,800) a tonne. It earlier matched its August peak of 56,390
yuan, a break above which would open the way to mid-May highs.
In other markets supporting metals, the euro pushed higher
against the dollar even after Moody's Investors Service changed
the outlook on its EU rating to negative.
A weaker dollar makes commodities cheaper for holders of
other currencies.
SEASONAL FILLIP
Highlighting the deepening slowdown in China's demand for
commodities, Australia's Fortescue Metals Group on
Tuesday slashed capital spending by about a quarter and cut its
expansion schedule for iron ore production.
Australia's central bank also held interest rates at 3.5
percent as it conceded the outlook for China was becoming more
uncertain.
China's vast manufacturing sector has been badly hit by
slowing new orders, two complementary surveys showed in recent
days, a sign that the pace of growth in the world's
second-largest economy will weaken well into the third quarter.
Still, traders said there was some evidence of seasonal
buying from consumers with low stocks such as cable makers, with
China beginning a week of holidays on Oct 1.
"Inside China certainly the market is getting better;
seasonality does play a part here. Consumer inventory levels are
still quite low," a Shanghai-based trader at a Western bank
said.
"I don't see anyone making any strategic inventory buys, but
manufacturers have to stock up ahead of the long holiday in
China next month."
PRICES
Base metals prices at 0708 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7650.50 -27.50 -0.36 0.66
SHFE CU FUT DEC2 56020 -160 -0.28 1.19
HG COPPER DEC2 347.95 2.25 +0.65 1.27
LME Alum 1931.50 4.50 +0.23 -4.38
SHFE AL FUT DEC2 15485 60 +0.39 -2.27
LME Zinc 1869.00 -6.00 -0.32 1.30
SHFE ZN FUT DEC2 14850 10 +0.07 0.37
LME Nickel 16242.00 22.00 +0.14 -13.19
LME Lead 1996.00 -3.00 -0.15 -1.92
SHFE PB FUT 15255.00 55.00 +0.36 -0.20
LME Tin 19603.00 -147.00 -0.74 2.10
LME/Shanghai arb^ 682
Shanghai and COMEX contracts show most active months
