* China industrial profits drop 6.2 percent to 381.2 bln yuan * Colombia sees Cerro Matoso nickel output up 35 pct in 2012 * Coming Up: Euro zone business climate ; 0900 GMT (Adds comment, updates prices) By Melanie Burton SINGAPORE, Sept 27 (Reuters) - London copper edged up on Thursday from two-week lows hit in the previous session, supported by traders betting on a fourth-quarter recovery in Chinese demand, though an upcoming holiday and simmering concerns over Europe's debt crisis capped gains. Copper product makers in top metals consumer China, where demand is expected to improve modestly in the fourth quarter, are getting their books in order before a week-long holiday beginning on Monday that is likely to pare volume and direction from the market. "You're only two days away from the start of big holidays in China, so people are looking to square books and cut risk," said Ivan Szpakowski, a Credit Suisse analyst in Singapore. "The other thing people have been looking at is how much central bank action flows through to the real economy, but for that we may have to wait until top tier data next week." From China, the National Bureau of Statistics manufacturing PMI for September is due on Oct. 1 followed by a slew of factory figures, while the market is also eyeing key U.S. non-farm payrolls data for September on Oct. 5. Three-month copper on the London Metal Exchange had risen 0.68 percent to $8,175 a tonne by 0711 GMT, reversing losses from the previous session when it a low of $8,082. Prices, which were down by more than 10 percent on the year in June have since rallied to log gains of 7.5 percent for the year so far, after the U.S. Federal Reserve and the European Central Bank announced stimulus measures earlier this month. The most-traded January copper contract on the Shanghai Futures Exchange slipped 0.14 percent to close at 59,070 yuan ($9,400)a tonne. Underlining the slowdown in China's economic growth, industrial profits fell 6.2 percent to 381.2 billion yuan ($60.49 billion) in August from a year ago, the government said on Thursday, quickening the pace of a drop in earnings this year. China accounts for around 40 percent of global metals demand. Investor appetite for risk was also tempered by uncertainty over a bailout for Spain and signs Europe is struggling to find a unified approach to tackling its debt crisis as global lenders wrangled over Greek restructuring. "We would want to sell into any near-term strength as prices look likely to move down to $8,000, and possibly $7,800, in the next four to six weeks - as the stimulus fever burns out and market jitters about Europe and China return to the fore," said ANZ in a research note Keeping some pressure on metals, the euro hovered near a two-week low against the dollar, as violent protests against austerity measures in Spain and Greece highlighted the challenges facing highly-indebted euro zone countries. A stronger dollar makes commodities more expensive for holders of other currencies. NICKEL LME nickel prices have so far rallied more than 17 percent from 3-year lows of $15,247 hit in August, but a dim outlook for the stainless steel sector given China's growth slowdown, and mounting supply suggests near-term price strength won't be sustained. Colombia's government said it expects output from the Cerro Matoso nickel mine to rise to 51,100 tons in 2012 from 37,810 last year. It also announced it would renegotiate outdated contract terms including royalty payments from the BHP Billiton mine. On Wednesday Global miner Xstrata said it was suspending operations at its Cosmos nickel mine in Western Australia due to prolonged weak prices for the metal and a strong Australian dollar. PRICES Base metals prices at 0711 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8175.00 55.00 +0.68 7.57 SHFE CU FUT JAN3 59070 -80 -0.14 6.70 HG COPPER DEC2 372.90 1.90 +0.51 8.53 LME Alum 2080.00 8.00 +0.39 2.97 SHFE AL FUT DEC2 15695 10 +0.06 -0.95 LME Zinc 2083.00 12.00 +0.58 12.90 SHFE ZN FUT JAN3 15650 30 +0.19 5.78 LME Nickel 18184.00 129.00 +0.71 -2.81 LME Lead 2270.00 6.00 +0.27 11.55 SHFE PB FUT 16120.00 20.00 +0.12 5.46 LME Tin 20700.00 -100.00 -0.48 7.81 LME/Shanghai arb^ 1204 Shanghai and COMEX contracts show most active months

Source