* Copper drops to 2-mth lows in London, Shanghai * ShFE copper stocks hit 6-mth high on Friday * China spot-over-futures spread still at a discount * Indonesia court scraps mineral export ban -industry body * Coming up: U.S. ISM Non-Manufacturing PMI for Oct at 1500 GMT (Updates prices; adds quotes, detail) By Carrie Ho SHANGHAI, Nov 5 (Reuters) - Copper hit two-month lows on Monday as investors shied away from risk with the U.S presidential election, China's leadership transition and two central bank meetings this week stoking uncertainty over global economic growth. Most analysts said that victory in Tuesday's U.S. election for Republican contender Mitt Romney would pave the way for more deregulation and tax cuts, while a second term for President Barack Obama would likely bring bigger public investment in education, research and infrastructure. China's once-a-decade leadership transition event, the 18th Communist Party Congress, is scheduled to start on Thursday, along with policy meetings held by the European Central Bank and the Bank of England. "The markets did not pick up despite Friday's positive U.S. nonfarm payrolls data, which underlined how cautious everyone is before the U.S. elections and China's Party Congress," said CIFCO Futures analyst Zhou Jie, referring to signs U.S. employers stepped up hiring in October. Also underscoring the risk-averse mood were U.S. hedge funds and money managers, who had cut their net long positions in copper in the week to Oct. 30, the Commodity Futures Trading Commission's Commitments of Traders showed. Three-month copper on the London Metal Exchange had edged down 0.3 percent to $7,643.25 per tonne by 0706 GMT, its lowest since Sept. 5. The most active February copper contract on the Shanghai Futures Exchange lost 1.5 percent to close the session at 55,780 yuan ($8,900), catching up with steeper falls in London on Friday and marking its cheapest level since Sept. 7. "Base metals prices are being weighed down by China's weak downstream metals demand, and are also unlikely to get a lift from positive policy announcements this week given the two political transition events on the schedule," Zhou added. Meanwhile, China's central bank's announcement in its latest policy report that it would prioritise supporting the economy above other needs only served to affirm expectations that the recovery in the Chinese growth engine is feeble at best. And in China's physical copper markets, spot prices are still trading at a discount to the ShFE front-month contract, indicating weak consumer demand. Also denting sentiment were copper stocks in ShFE-monitored warehouses, which were at a six-month high at 197,937 tonnes on Friday, after rising 31 percent since Sept. 7. CU-STX-SGH "(The) rise in copper stocks was accompanied by an import loss of between 1,000-2,000 yuan, which weighed down on copper import volumes and bonded warehouse drawdowns," Minmetals Futures said in a note on Friday. "We believe this trend may worsen copper's fundamentals in China and will eventually cause more unsold stocks of Chinese smelters to show up in warehouse volumes here." Analysts said smelters would probably warehouse their unsold stocks for financing. "Given how low copper prices are now, it would make sense for smelters to put excess supplies under financing until the markets recover. To do that, they'll have to put them in warehouses and get receipts," said CIFCO's Zhou. ShFE aluminium and nickel prices were further pressured by a decision by the Indonesian supreme court to scrap a May 6 government ban on the export of unprocessed minerals, including nickel ores and bauxite. "The news is negative in nature for prices as it means Chinese smelters can get hold of raw materials more easily, which means metal production will likely grow," said a Shanghai-based trader. "But impact of this news will be quite small as everyone is distracted by this week's political events." Elsewhere, lingering fears over the global economy were highlighted at the Group of 20 Meeting, where finance chiefs of leading economies pressed the U.S. on Sunday to avert a rush of spending cuts and tax hikes that could hurt global output next year. Base metals prices at 0706 GMT Metal Last Change Pct Move YTD pct chg LME Cu 7643.25 -21.75 -0.28 0.57 SHFE CU FUT FEB3 55780 -840 -1.48 0.27 LME Alum 1914.00 -11.00 -0.57 -5.25 SHFE AL FUT JAN3 15290 -70 -0.46 -3.47 HG COPPER DEC2 347.00 -1.15 -0.33 0.99 LME Zinc 1859.00 -15.00 -0.80 0.76 SHFE ZN FUT FEB3 14775 -100 -0.67 -0.14 LME Nickel 15852.00 -123.00 -0.77 -15.28 LME Lead 2079.00 -16.00 -0.76 2.16 SHFE PB FUT 15155 -115 -0.75 -0.88 LME Tin 20101.00 -59.00 -0.29 4.69 LME/Shanghai arb 67 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

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