* Bank funding plans ally European debt crisis for the short-term * LME copper may rebound to $8,863 -technicals * Coming up: European Union ministers meeting By Rujun Shen SINGAPORE, Sept 16 (Reuters) - Shanghai copper climbed more than 1 percent on Friday after a funding plan for banks allayed fears over Europe's festering debt crisis, but the support is expected to be short-lived. Major central banks around the world will cooperate to offer three-month U.S. dollar loans to commercial banks in order to keep money markets from freezing up in the wake of Europe's sovereign debt crisis. But the plan is likely to offer only short-term relief to the metals markets, as investors remain sceptical of any speedy resolution to the crisis. "Yes it was good news, but I am not convinced enough to turn bullish," said a Singapore-based trader. "The feeling is that the European crisis is still there. The risk appetite is not in, the demand is not in. Unless we see a concrete rally on decent volume, the trend will not turn." The latest data from the United States was mixed, with one batch showing that new claims for jobless benefits hit their highest level last week since late June, but that industrial production edged up 0.2 percent last month. Three-month copper on the London Metal Exchange gained 0.7 percent to $8,770.75 a tonne by 0701 GMT, but was headed for a weekly drop of 0.6 percent. The most-active Shanghai copper futures contract for December delivery rose 1.3 percent to 65,850 yuan a tonne and ended the week with a 2.6 percent drop, its biggest weekly decline in a month. Shanghai's front-month copper contract was at a premium of 250 yuan above the most-active third-month contract, suggesting some support from buying in the physical market. Shanghai copper enjoyed an arbitrage of 330 yuan above LME prices, which has triggered some buying as traders and consumers replenish stocks ahead of a week-long holiday in early October in China, the world's biggest consumer of the metal. "There has been some pre-holiday stockpiling buying," said Bonnie Liu, an analyst at Macquarie in Shanghai. "But as the macroeconomic environment outside China remains dismal and demand in China hasn't picked up much after the summer lull, copper may not hold on to the $8,500 level." As market participants worry that China's copper demand may buckle under the global economic gloom, JX Nippon Mining and Metals Corp , parent of Japan's top copper smelter, said the Chinese demand remains solid. Strikes at Freeport McMoran's Grasberg copper and gold mine in Indonesia and Cerro Verde copper mine in Peru entered the third day, supporting sentiment in the market. Investors are watching a meeting of U.S. Treasury Secretary Timothy Geithner and European finance ministers later in the day. China may get its first physically backed exchange-traded nickel fund later this year, which could raise the country's import demand for the metal, trading sources said. LME nickel rose 0.7 percent to $21,950 a tonne, headed for a 3.7-percent weekly gain, its strongest week since end of July. Base metals prices at 0701 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8770.75 59.75 +0.69 -8.64 SHFE CU FUT DEC1 65850 830 +1.28 -8.35 LME Alum 2380.00 6.00 +0.25 -3.64 SHFE AL FUT NOV1 17485 50 +0.29 3.83 HG COPPER DEC1 397.00 6.00 +0.33 -10.58 LME Zinc 2198.25 9.25 +0.42 -10.42 SHFE ZN FUT NOV1 16845 95 +0.57 -13.50 LME Nickel 21950.00 150.00 +0.69 -11.31 LME Lead 2400.25 14.75 +0.62 -5.87 SHFE PB FUT 16350 75 +0.46 -10.90 LME Tin 23650.00 50.00 +0.21 -12.08 LME/Shanghai arb -330 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

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