* China, London copper price spreads signal slack spot demand * Money managers added to bullish copper bets last week * Coming Up: President Obama to submit 2013 budget proposal Mon (Updates prices) By Melanie Burton SHANGHAI, Feb 13 (Reuters) - London copper rallied on Monday, recovering from last week's sell-off, after the safe passage of Greece's austerity bill enhanced the allure of risky assets. Three-month copper on the London Metal Exchange rose by 0.88 percent to $8,560 a tonne by 0505 GMT, clawing back some losses from the previous session when prices fell 3 percent. Copper last week hit its highest level in nearly five months at $8,765 and has rallied 12 percent so far this year, but last week, it closed lower on the week for the first time since early January. The most-traded May copper contract on the Shanghai Futures Exchange slipped 1.27 percent to 60,780 yuan a tonne. Bonnie Liu, analyst at Macquarie, said the passage of a deeply unpopular austerity bill through the Greek parliament may have injected some calm into the markets but a further deterioration in Europe's debt saga could send prices lower, given lower demand from top copper consumer China. "Europe's just a mess," said Liu. "After the Chinese new year, the pace of demand recovery has been slower than expected, so we have seen the physical markets suffer some pressure. "If we want to see prices go to the next stage, then we need to see Chinese demand come back," she said. Greece's parliament approved the austerity bill on Monday to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country. Copper futures prices in China showed that local demand remained slack, with the price differential between London and Shanghai widening to around $400 per tonne from $300 a tonne on Friday as Chinese consumers showed reluctance to step in. Also, the ShFE copper futures curve signalled a lack of spot appetite for metal, with front-month prices trading well below third-month prices since early January, having traded at a premium for most of the second half last year. "We think that the recent rally across metals, which was driven by improved funding conditions and the better than expected US economic data, could lose some steam in the very near-term," said Credit Suisse Private Banking in a note. "However, we would also argue that the downside risks should not be very deep in light of the encouraging macro economic backdrop compared to only a few months ago." Some U.S. fund managers, however, continue to buy copper. Money managers in gold, silver and copper futures and options raised their net long positions in the week of Feb. 7, as investor interest in the three metals continued to recover after a recent disappointing performance. The world's top aluminium producer, Russia's United Company RUSAL Plc , said on Monday it may cut aluminium output by 6 percent in the next 18 months. But excess capacity in aluminium smelting will drag on for years to come, even while losses weigh on producers, as political pressures in China and Russia to keep jobs and push self-sufficiency prevent or delay plant closures. Base metals prices at 0505 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8560.00 75.00 +0.88 12.63 SHFE CU FUT MAY2 60780 -780 -1.27 9.79 HG COPPER MAR2 389.50 3.30 +0.85 13.36 LME Alum 2264.50 21.50 +0.96 12.10 SHFE AL FUT MAY2 16300 -25 -0.15 2.87 LME Zinc 2106.00 29.00 +1.40 14.15 SHFE ZN FUT APR2 16035 -95 -0.59 8.38 LME Nickel 21000.00 295.00 +1.42 12.24 LME Lead 2166.50 31.50 +1.48 6.46 SHFE PB FUT 16130.00 -85.00 -0.52 5.53 LME Tin 25150.00 105.00 +0.42 30.99 LME/Shanghai arb^ 2546 Shanghai and COMEX contracts show most active months

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