* Tin best performer in 2012 so far, up 22 pct * Lead hits highest since mid-September 2011 * Coming up: U.S. housing starts for November at 1330 GMT By Harpreet Bhal LONDON, Dec 19 (Reuters) - Copper slipped on Wednesday as uncertainty about the outlook for demand kept investors cautious, although easing fears about a U.S. budget crisis prevented further falls in metals prices. Republicans tried to squeeze more concessions from the White House on taxes on Tuesday in political manoeuvring for a deal that would prevent the U.S. economy from going over the so-called "fiscal cliff" of tax hikes and spending cuts in the new year. Analysts said physical demand remained sluggish for the metal used in power and construction as the year draws to a close, keeping prices in a tight range. "As we approach the end of the year, there is some book-squaring activity going on, and people have been taking profits, so copper has drifted lower," Andrey Kryuchenkov, an analyst at VTB, said. "There is a good chance that we could see a last-minute deal in the U.S. to avert a fiscal cliff. Provided that goes ahead, it would be good for the base metals market. However, for the gains to be sustained for the likes of copper, we need to see more evidence of improvement in spot demand." Three-month copper on the London Metal Exchange (LME) traded at $7,990 a tonne in official rings. It was untraded at the close on Tuesday but was bid at $8,024 a tonne. Since a price rally of almost 8 percent from mid-November to a near two-month high on Dec. 12, momentum has begun to fade, with traders cutting risk and squaring positions ahead of year-end. The metal is up more than 5 percent for the year. "With market participants closing their books ahead of year-end, we wouldn't really expect too big a change, especially in the industrial metals space, where it seems there is a consolidation going on from the recent shift higher," Stefan Graber, an analyst at Credit Suisse, said. STRONG EURO Also helping support prices was a rise in the euro to a 7-1/2-month high against the dollar after data showed German business sentiment climbed for a second month running in December as confidence in the outlook surged more than at any time in the last 2-1/2 years. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies. In industry news, some banks have tightened credit for imports of refined copper by China, the world's largest consumer of the metal, as stocks pile up in bonded warehouses and prices hover below London rates, reducing buying of the metal and keeping premiums low. In other metals, three-month tin hit its highest since mid-March at $23,847, up from a close of $23,525 a tonne on Tuesday. It was untraded in official rings, but bid at $23,650. Tin has been the top performer of the base metals this year, up 22 percent, and has been streaking ahead of the second-best performer, lead, which has gained almost 14 percent. Tin prices have hit successive eight-month highs for six of the last eight sessions, boosted by longer term technical buying and short-covering, RBC Capital said in a note. "While the longer-term prospects for tin continue to look positive in terms of price, the short-term risk would appear to have more downside than upside potential, given the recent run," RBC said. Lead hit its highest since mid-September 2011 at $2,347.75 a tonne. It traded at $2,333 in rings, up from a close of $2,319 on Tuesday. Zinc, untraded in rings, was bid at $2,082 from a close of $2,090 a tonne, while aluminium, also untraded, was bid at $2,104 from $2,098. Nickel was at $17,675 from Tuesday's close of $17,800.

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