* German Ifo stronger than expected, rises for fourth month * LME copper little changed on thin volumes * Euro zone economy to contract 0.3 pct in 2012 By Silvia Antonioli London, Feb 23 (Reuters) - Copper was mildly weaker on Thursday, with investors caught between a stronger-than-expected outcome from German business sentiment data and EU expectations for the euro zone's economic output to contract 0.3 percent in 2012. German business sentiment rose for the fourth time in a row in February, beating expectations and signalling that Europe's largest economy is picking up steam and avoiding recession. But European Commission interim data showed euro area GDP was expected to shrink 0.3 percent this year compared with a previous forecast for 0.5 percent growth. Sentiment was also constrained by weak manufacturing sector data in top copper consumer China on Wednesday. Analysts said the market, which takes its cue from wider economic sentiment to predict demand, was assessing the data, but broadly the mood was cautiously optimistic given a low interest rate environment that should stimulate growth. "In the medium term the outlook is positive as the recent intervention of the Chinese central bank has given an important signal of a gradual shift to a looser monetary policy which will support copper," said Gianclaudio Torlizzi, partner at metals consultancy T-Commodity. China's central bank cut the amount of cash banks must hold in reserves on Feb. 19. "The looser policy of other central banks is also helping metals," Torlizzi added. Three-month copper on the London Metal Exchange stood at $8,418 a tonne by 1048 GMT -- just 0.2 percent down from Wednesday's close of $8,435. Even though the German sentiment data pointed to the euro zone's powerhouse avoiding recession, a continued contraction in China's manufacturing sector would make it hard for economy-sensitive copper to sustain an 11 percent gain year to date. Surveys of purchasing managers showed unexpectedly weak activity in the euro zone's most powerful economy, Germany, and in France. A preliminary purchasing managers' survey in China showed export orders falling the most in eight months. Credit Suisse said considering that Wednesday's data, particularly the weaker manufacturing figure out of Germany, did not fuel a sell-off, it suggests underlying strength in industrial metals. STRONG POTENTIAL FOR ALUMINIUM Countering poor data in Europe and China, U.S. home resales rose to a 1-1/2-year high in January, pushing the supply of properties on the market to the lowest level in almost seven years in a hopeful sign for the housing sector. {ID:nL2E8DM3HP] Expectations of a global copper production deficit are supporting prices but it is unclear when demand will rise, said Germany's Aurubis, Europe's biggest copper producer. Compared to copper, there may be more upside potential for aluminium which has gained more than $100 in less than a week, and at $2,280 on Thursday is not too far off its 200-moving day average of $2,311.72. "If it broke through its 200-moving day average, it would potentially be quite a strong signal," said ANZ senior analyst Nick Trevethan. "Near-term prospects look quite decent for aluminium. There's reasonable demand from the aerospace sector, and from the auto sector in North America at least and higher energy prices are also supporting the market." Aluminium stockpiles at LME warehouses staying at record highs above five million tonnes as well as excess smelting capacity had pressured prices late in 2011 even as bulk of the LME stocks are believed to be tied to financing deals. Metal Prices at 1048 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct move COMEX Cu 382.35 -1.00 -0.26 444.70 -14.02 LME Alum 2275.25 -4.75 -0.21 2470.00 -7.88 LME Cu 8421.00 -14.00 -0.17 9600.00 -12.28 LME Lead 2143.75 -4.75 -0.22 2550.00 -15.93 LME Nickel 20176.00 76.00 +0.38 24750.00 -18.48 LME Tin 24000.00 -50.00 -0.21 26900.00 -10.78 LME Zinc 2052.50 -14.50 -0.70 2454.00 -16.36 SHFE Alu 16225.00 -25.00 -0.15 16840.00 -3.65 SHFE Cu* 60420.00 -70.00 -0.12 71850.00 -15.91 SHFE Zin 15865.00 40.00 +0.25 19475.00 -18.54 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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