* Worries over pace of economic recovery return * Investors still betting the U.S. Fed will help growth * Coming up: U.S. Chicago PMI for August at 1345 GMT (Adds official prices) By Maytaal Angel LONDON, Aug 31 (Reuters) - Copper fell on Tuesday as nervousness over the pace of economic recovery reigned ahead of a slew of key U.S. data due this week, but losses were limited as investors bet the Federal Reserve will stimulate growth. Benchmark copper for three-months delivery on the London Metal Exchange traded at $7,360 a tonne in official midday rings from a close of $7,459 on Friday. Markets were closed on Monday for a UK public holiday. Copper earlier hit $7,475, its highest since Aug 19, and is on track for a gain of around 1.5 percent in August, its second monthly increase in a row. "The financial market is negative with respect to macro activity over the next quarter but at the same time there's the Fed waiting to support weakness, and the physical market is strong so overall the tendency is for prices to deteriorate modestly," said Dan Brebner, analyst at Deutsche Bank. COMEX copper hit a 3-1/2 month peak on Monday after the Japanese central bank eased monetary policy. The move followed a speech by Federal Reserve Chairman Ben Bernanke, who promised to act as needed to bolster the economy. Also on Monday, data showed U.S. consumer spending at its strongest in four months, but the 0.2 percent gain in personal incomes was smaller than forecast, renewing fears over prospects for further economic recovery. A slew of data this week may help to confirm whether those fears are justified. Friday's nonfarm payrolls are seen down around 100,000 as the U.S. government sheds temporary census jobs. Also on the agenda are several manufacturing reports, auto sales, house prices and sales, and construction spending. China's purchasing manager data is expected on Wednesday. "Base metals will be tested by the latest round of PMI releases. A busy and potentially negative US economic calendar could also trigger a fresh bout of risk aversion," said ANZ in a note. STOCKS FALL Supporting copper, stocks in LME warehouses, at 398,525 tonnes, are down more than 150,000 tonnes since mid-February and at the lowest level since November. Aluminium stocks in LME warehouses have also been falling. They now stand at 4.44 million tonnes compared with a record above 4.64 million tonnes in January. However, about 70 percent of LME aluminium stocks are said to be tied up in financing deals, which earn banks higher returns than they would get in money markets and release cash for producers. That is said to be the reason for the large holdings of LME aluminium stock warrants and cash contracts by two entities. This combined with large short positions is why there is a backwardation or premium for nearby material. The premium for material to be delivered on Wednesday and bought back on Thursday -- known as tom/next and often used to lend material to short positions -- is now around $1 a tonne. Aluminium, used in transport and packaging, was at $2,053 a tonne from $2,058 on Friday. Earlier it hit $2,068, its best level since Aug. 23. Boosting sentiment, top aluminium maker UC RUSAL said on Tuesday continued recovery in global markets should generate good opportunities for growth in demand for aluminium as its second quarter profits beat forecasts. Tin traded at $21,325 from $21,640, and nickel at $20,790 from $21,050. Tin prices hit a two-year high on Friday on the back of ongoing supply constraints in top exporter Indonesia, which have bolstered the metal's price prospects. "The raw material used in soldering and food packaging is among the strongest performers in commodity markets in 2010, rising 37.1 percent for the year to date," said Fairfax analysts in a note. Top miner PT Timah Tbk said on Tuesday first-half net profit rose to 322.3 billion rupiah ($35.8 million) from 42.8 billion rupiah a year ago, on higher tin prices. Zinc was at $2,072 from $2,092, while battery material lead was at $2,045 from $2,090. Both metals earlier hit their highest in more than a week at $2,110 and $2,099.75, respectively. Metal Prices at 1203 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 336.50 -5.50 -1.61 334.65 0.55 LME Alum 2050.00 -8.00 -0.39 2230.00 -8.07 LME Cu 7387.00 -72.00 -0.97 7375.00 0.16 LME Lead 2052.00 -38.00 -1.82 2432.00 -15.63 LME Nickel 20650.00 -400.00 -1.90 18525.00 11.47 LME Tin 21150.00 -490.00 -2.26 16950.00 24.78 LME Zinc 2071.00 21.00 +1.02 2560.00 -19.10 SHFE Alu 15370.00 -145.00 -0.93 17160.00 -10.43 SHFE Cu* 58350.00 -980.00 -1.65 59900.00 -2.59 SHFE Zin 17060.00 -450.00 -2.57 21195.00 -19.51 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by James Jukwey)

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