MARKETS-METALS (UPDATE 2) * Copper prices up 2 pct in Shanghai, 1.3 pct on LME * Surge in new order China PMI component lifts outlook * Focus on equivalent U.S. data and Friday's jobs report * Coming Up: U.S. ISM Manufacturing PMI; 1400 GMT By Nick Trevethan SINGAPORE, Sept 1 (Reuters) - Copper prices rose 2 percent in Shanghai on Wednesday while London metal reversed early losses to rally to a four-month high, buoyed by optimism about China's manufacturing base after positive purchasing manager data. China's official purchasing managers' index (PMI) rose to 51.7 in August from 51.2 in July. The rise in the new order component to 53.1 from 50.9 was seen as especially supportive. The headline figure compared with the median forecast of 51.8 in a Reuters poll of 10 economists but it was the 18th straight month that official PMI has stood above the threshold of 50 that marks expansion. "Commodity markets generally seem to have been worrying less about China and more focused on the U.S. recently, but China is obviously very important," said Ben Westmore, a commodities analyst at National Australia Bank. "The underlying strength in that economy is still sound, such that commodity demand and demand for oil will continue to be strong in the next couple of years." Three-month LME copper fell $10 in its first trade to $7,430, having ticked down a quarter of a percent in the previous session. By 0707 GMT, however, copper had reversed direction, rising almost $100 to $7,537.25, having touched $7,585 earlier, its highest since the end of April. Benchmark third-month Shanghai copper rose 2 percent to 59,500 yuan, and also hit a four-month high earlier in the day. "After the run of weak data from the United States through August, the Chinese numbers were a breath of life for the start of the new month," a dealer in Perth said. "Almost everyone is bullish on the longer term outlook, the doubt is about timing and whether we will get a leg down first. The numbers are giving us a little confidence that the timing will be sooner, not later and we may have already had that down leg." Investors weighed and mostly dismissed a crop of U.S. housing and regional business activity numbers in the previous session, to focus on the data for China and equivalent numbers due later on Wednesday from the United States as well as the U.S. payroll report on Friday. "My worry is that the gains may not last. Yes, China is a huge consumer, but it's less important when it comes to market sentiment. That's where the United States still dominates and if the numbers there continue to disappoint all this could sour very quickly," the Perth dealer added. There was only marginal effect on metals from the after-hours release of the Federal Reserve minutes of its last policy-setting meeting, suggesting the Fed would not act unless the economy appreciably worsened. Despite the rise in futures, physical traders said the interest from consumers remained light. "People are talking some very big numbers for copper prices, but so far physical consumers haven't really entered the market. So far none of my customers have told me to get them copper at any price," a merchant in Singapore said. "Until I start hearing that kind of thing, we won't see the big rallies that some of the banks are talking about." Last month, Standard Chartered Bank said commodity prices, led by a surge in copper to $12,000, would rocket over the next 12 months, well above market forecasts, on fears of a supply crunch as the virtual halt in exploration expansion during the financial crisis began to bite. Base metals prices at 0707 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 7537.25 97.25 +1.31 7375.00 2.20 SHFE Cu* 59500.00 1150.00 +1.97 59900.00 -0.67 LME Alum 2063.00 5.00 +0.24 2230.00 -7.49 SHFE Alum* 15475.00 105.00 +0.68 17160.00 -9.82 COMEX Cu** 342.25 5.90 +1.75 332.75 2.85 LME Zinc 2108.50 43.50 +2.11 2560.00 -17.64 SHFE Zinc 17405.00 345.00 +2.02 21195.00 -17.88 LME Nickel 21170.00 470.00 +2.27 18525.00 14.28 LME Lead 2093.00 23.00 +1.11 2432.00 -13.94 LME Tin 21315.00 315.00 +1.50 16950.00 25.75 LME/Shanghai arb^ 565 Dollar/yuan 6.8112 \ 6.8119 ** 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 Clarence Fernandez)

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