* China policy fears ease a little * Quake off Chile coast too small, deep to impact mines * Coming up: FOMC statement on rate policy (1815 GMT) By Nick Trevethan SINGAPORE, March 16 (Reuters) - Copper prices rose in London and Shanghai on Tuesday, reversing losses in previous sessions as fears about the impact of Chinese monetary tightening on demand faded a little. Worries that China's attempts to quell inflation could also cut demand for metals, or drive commodities speculators using cheap loans to cash in positions if interest rates rise, has prompted liquidation in the past few days. But analysts said although sentiment may have been shaken by the risk of China raising interest rates, the outlook for real demand was unchanged. "There is a perception that the very strong rebound in prices seen last year was driven by easy money conditions, not only in China but globally," Barclays Capital analyst Yingxi Yu said. "Our economists have revised their calls for the first rise in benchmark interest rates from the third quarter to the second. This may have an impact on market sentiment, but I don't think it will affect real demand conditions in China." She added that the bank's GDP forecast for China in 2010 remained at 9.6 percent and policy would remain sufficiently loose to accommodate annual growth rates of the order of 9 to 10 percent. Three-month copper on the London Metal Exchange CMCU3 rose $31 to $7,341 by 0217 GMT, having slipped 2.1 percent in the previous session and almost 5 percent in the past six sessions. The market shrugged off a 6.7 magnitude earthquake off the coast of Chile as too small and too deep to threaten copper output or infrastructure, following the huge 8.8 quake at the end of last month that sent prices roaring almost 6 percent higher. [ID:nN15226125] Sentiment was underpinned by another fall in LME copper stocks, down for the ninth day running -- their longest run of declines since an extended period of stock draws in the second quarter of last year. For a graphic showing copper stocks and cancelled warrant ratios, double-click: here Benchmark third-month Shanghai copper SCFc3 rose 150 yuan to 58,530 yuan. London copper remained at a premium to Shanghai, effectively closing arbitrage opportunities, but it has narrowed to 100 yuan from more than 400 on Monday and traders said the window may reopen again. "The arb is shut for the moment, but we think it will reopen. There is strong demand from certain sections of the consumer community and stocks of material held in bonded warehouses have come down," a trader in Hong Kong said. "Demand usually picks up in the second quarter and that should result in higher prices in the spot market and lift demand for imported metal." LME zinc CMZN3 rose $8.50 to $2,288, while Shanghai metal SZNc3 ticked up 50 yuan 18,545 yuan. In industry news, Japan's Toho Zinc (5707.T: Quote, Profile, Research) raised its bid for a stake in Australian-listed zinc miner CBH Resources (CBH.AX: Quote, Profile, Research) to knock out a rival offer from Belgian metals group Nyrstar (NYR.BR: Quote, Profile, Research), CBH said. CBH said Toho was now offering 25 cents a share for a maximum 49.9 percent of the company, which is set to more than double its annual output to 59,000 tonnes of zinc metal and 30,000 tonnes of lead from its main Endeavor mine in central Australia this year. Base metals prices at 0217 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 7341.00 31.00 +0.42 7375.00 -0.46 SHFE Cu* 58530.00 150.00 +0.26 59900.00 -2.29 LME Alum 2234.00 7.00 +0.31 2230.00 0.18 SHFE Alum* 16705.00 35.00 +0.21 17160.00 -2.65 COMEX Cu** 331.80 1.10 +0.33 332.75 -0.29 LME Zinc 2288.00 8.50 +0.37 2560.00 -10.63 SHFE Zinc 18545.00 50.00 +0.27 21195.00 -12.50 LME Nickel 21645.00 145.00 +0.67 18525.00 16.84 LME Lead 2205.00 2.00 +0.09 2432.00 -9.33 LME Tin 17650.00 240.00 +1.38 16950.00 4.13 LME/Shanghai arb^ 100 Dollar/yuan 6.8262 \ 6.8267 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Editing by Himani Sarkar)

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