* LME copper bounces off session trough, lowest since Dec 1 * Shanghai copper pares losses after opening at lower daily trade limit * China CPI quickens to 6.5 pct, but tightening unlikely - analysts (Updates prices, adds quotes and details) By Carrie Ho SHANGHAI, Aug 9 (Reuters) - London copper steadied after hitting an eight-month low on Tuesday, as investors bought on dips believing that the selloff triggered by fears of a global economic slowdown may have been overdone. Fears that political leaders are failing to tackle debt crises in the United States and Europe had earlier triggered a global rout in riskier assets. Three-month copper on the London Metal Exchange rose 0.8 percent to $8,837 a tonne by 0733 GMT, paring losses after shedding 3.7 percent to its session low of $8,446.25, the lowest since December 1, 2010. It lost 2.9 percent in the last session and is on track to reverse four previous consecutive sessions of losses. The most-active October copper contract on the Shanghai Futures Exchange SCFcv1 hit its daily trade limit at the open, dropping 6.1 percent to 63,560 yuan. Trading soon restarted with the contract closing 2.5 percent lower at 65,960 yuan. "The earlier selloff was perhaps a bit overdone driven by panic. The U.S. Fed is meeting later today and there are some market expectations of a QE3," said China Futures analyst Yang Jun. "The fundamentals of all base metals, other than zinc, are strong, especially those of copper and aluminium. I think today's lowest price for LME copper could be the year's lowest. We should see copper moving upwards of that from here on." Shanghai aluminium SAFcv1 and zinc SZNcv1 contracts also breached their lower daily trade limits shortly after the open, but restarted again afterwards with zinc closing 1.1 percent higher. "The recent selloff in zinc has also been a bit overdone, and it has upside room now," Yang said. But some analysts advised caution in the longer term, citing that the problems in developed economies remained deep-seated. "It's hard to tell what will happen from here. I think any speculation that this is just a short-term selloff is a dangerous game. But history shows that you can still have a short-term bounce under these circumstances, which you can use to reduce some positions," said global head of UBS Wealth Management Research Dominic Schnider. European shares rose sharply on Tuesday as investors looked for bargains in stocks that had dropped for seven straight days, while Asian shares nosedived but pared early losses. Italian and Spanish government bond yields fell in early trade on Tuesday, narrowing the spread over German Bunds, on anticipation the European Central Bank would continue buying debt issued by the two countries. The Federal Reserve gathers on Tuesday under growing pressure to take some type of action to stem a financial market meltdown linked to fears of a new U.S. recession. China's consumer price inflation quickened to 6.5 percent in July from June's 6.4 percent, the National Bureau of Statistics said on Tuesday, topping market forecasts for a reading of 6.3 percent. China's industrial output in July missed market expectations with a slowdown to 14.0 percent year-on-year from a 15.1 percent rise in June, the bureau said. "The inflation figures out of China were a bit high but I don't think Beijing will roll out any tightening measures since the external environment is not very stable," Shanghai Dongzheng Futures Trader Du Xiao Hua said. LME lead pared early losses and rose more than 4 percent at one point to $2,303. "There have been some arbitrage deals in lead and zinc of late and this could be the result of that. We hear that big banks are holding long positions on these," Du said. "They perhaps figure that demand will return since this rout is financial in nature, while China's economy remains stable." Base metals prices at 0733 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8837.00 67.00 +0.76 -7.95 SHFE CU FUT OCT1 65960 -1720 -2.54 -8.20 LME Alum 2432.00 46.00 +1.93 -1.54 SHFE AL FUT OCT1 17265 190 +1.11 2.52 HG COPPER SEP1 399.35 0.00 +0.81 -10.05 LME Zinc 2151.50 60.50 +2.89 -12.33 SHFE ZN FUT OCT1 16400 -355 -2.12 -15.79 LME Nickel 21850.00 600.00 +2.82 -11.72 LME Lead 2283.75 78.75 +3.57 -10.44 SHFE PB FUT 15895 -255 -1.58 -13.38 LME Tin 23350.00 845.00 +3.75 -13.20 LME/Shanghai arb 547 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month Shanghai lead launched on March 24 (Reporting by Carrie Ho; Editing by Clarence Fernandez and Sugita Katyal)

Source