* Yuan jumps in 2 days by most over 3 years * LME copper at 700 yuan discount to Shanghai copper * China July trade data, Fed's low rate pledge support * Market eyes U.S. and eurozone debt woes * U.S. Initial jobless claims, Jul 30; 1230 GMT SHANGHAI, Aug 11 (Reuters) - LME copper rose 3 percent on Thursday as markets stabilised and on an open arbitrage to sell metal to top consumer China, where imports are being cheapened by yuan strength. Shares edged back from a hammering a day earlier after doubts were raised over the health of French banks, but investors are still eyeing the possibility of European debt contagion and weaknesses in the U.S. economy. Three-month copper on the London Metal Exchange surged 2.6 percent to $8,820 a tonne by 0733 GMT, trimming losses since the start of the month to just under 10 percent. Volume was robust with over 13,700 lots traded, several times more than usual for this time of day. The most-active October copper contract on the Shanghai Futures Exchange SCFcv1 fell 0.6 percent to close at 66,710 yuan per tonne, catching up with overnight London losses. LME three-month copper traded at a 758 yuan a tonne discount to the ShFE October copper contract, taking into account a 17 percent VAT in China, encouraging imports. "The arbitrage window just opened and Chinese investors feel that there are opportunities to import now after LME copper prices dipped with the recent market rout," said Dongzheng Futures analyst Du Xiao Hua. Making copper cheaper for Chinese buyers is the strength of the yuan, set at a record mid-point of 6.3991 against the dollar on Wednesday. The mid-point has risen 0.54 percent over the past two days, the biggest such jump since February 2008. Traders said the central bank might be testing the waters for letting the yuan appreciate more quickly as a way of containing inflation. "This move suggests that China feels confident about its economy and about world growth to allow its currency to appreciate," said Citigroup analyst David Thurtell. U.S. stock futures rose 1.5 percent on Thursday, after a sharp drop in the cash index overnight when rumours about the health of French banks sparked concern the euro zone's debt crisis could claim new victims. U.S. wholesale inventories in June posted their smallest rise in seven months as sales rebounded more than expected, pointing to a moderate buildup in unsold goods, which should support manufacturing. Safe haven gold eased on Thursday after the raising of COMEX gold futures margins, after hitting a record above $1,800 an ounce. The euro fell to fresh five-month lows against the yen in Asia looked set to stay under pressure on euro zone debt worries. Base metals prices at 0733 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8820.00 225.00 +2.62 -8.13 SHFE CU FUT OCT1 66710 -380 -0.57 -7.15 LME Alum 2415.00 19.00 +0.79 -2.23 SHFE AL FUT OCT1 17635 45 +0.26 4.72 HG COPPER SEP1 398.90 -8.15 +2.58 -10.15 LME Zinc 2170.25 70.25 +3.35 -11.56 SHFE ZN FUT OCT1 16780 70 +0.42 -13.84 LME Nickel 21565.00 590.00 +2.81 -12.87 LME Lead 2324.00 49.00 +2.15 -8.86 SHFE PB FUT 16380 -25 -0.15 -10.74 LME Tin 23201.00 456.00 +2.00 -13.75 LME/Shanghai arb -758 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Reporting by Carrie Ho; Editing by Michael Urquhart and Jason Neely)

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