* G7 intervenes on yen, oil up on U.N. Libya vote
* China raises banks' required reserves again
* Shanghai Futures Exchange to launch lead futures March 24
* Coming up: U.S. ECRI Weekly index; 1430 GMT
(Updates prices after China move)
By Marie-Louise Gumuchian
LONDON, March 18 (Reuters) - Copper fell on Friday as Middle East tensions weighed but a G7 joint intervention to calm market nerves over the Japanese earthquake disaster helped boost risk appetite.
Three-month copper on the London Metal Exchange extended losses after China's central bank said it would raise lenders' required reserves again. The metal used in power and construction traded at $9,468 a tonne by 1049 GMT from Thursday's close of $9,565. Other base metals rose.
"There is a rebound in risk appetite but it's being limited by what is going on in the Middle East," Danske Bank analyst Christin Tuxen said.
"Overall we are seeing a rebound in risk appetite and in demand for commodities ... The idea that a weaker yen would be able to improve Japanese companies' competitiveness is spurring market optimism that the Japanese industry will be coming back on track sooner ... This is quite positive for base metals."
The Group of Seven agreed on joint intervention to curb the soaring yen and calm markets jittery over Japan's nuclear power plant crisis. Japan is still racing to keep the overheating fuel rods at a quake-damaged nuclear power plant under control and avert a nuclear catastrophe.
Base metals have largely outperformed the commodities complex and equities in the week following the Japan earthquake and tsunami, as Japan's reconstruction effort is expected to boost metals demand in the medium- to long-term.
Top copper consumer China's central bank said it would raise lenders' required reserves by 50 basis points, the third time this year and the sixth since November.
"China is taking some moderate measures to cool down the economy. This may have a negative impact in the near-term but we don't think it will derail China's growth in terms of base metals," Credit Suisse analyst Stefan Graber said. "China's metals demand will continue to grow robustly this year."
Investors are also watching the escalating tensions in the Middle East and North Africa. The United Nations authorised military attacks on Muammar Gaddafi's forces, but his forces closed in on the Libyan rebels and he vowed to storm their stronghold with "no mercy, no pity."
"The Middle East tensions are very much looming in the background," Tuxen said.
COPPER STOCKS RISE AGAIN
In Asia, traders cited renewed Chinese buying. Investors have lamented a dearth of buying by China, as the world's top copper consumer has dashed market hopes by not returning to the market as expected after its New Year holiday in February.
Stocks of copper in LME warehouses last rose 850 tonnes to 429,650 tonnes, data showed. Aluminium traded at $2,535 from $2,523 a tonne. LME stocks of the metal used in transport and packaging last fell 6,575 tonnes to 4,612,825 tonnes, but a record-high 4,640,750 tonnes hit in January 2010 remains within reach.
Lead traded at $2,683 from $2,651 a tonne.
Shanghai Futures Exchange said it had received regulatory approval to officially start trading lead futures from March 24, bringing a new hedging instrument for smelters to manage price risks.
Tin traded at $29,574 from $29,375 a tonne while zinc was at $2,340 from $2,333 a tonne.
Nickel traded at $26,150 from $25,925 a tonne.
Somali pirates hijacked a nickel cargo ship owned by shipping firm PT Samudera Indonesia, a director of the firm said on Friday.
