* Copper set to post smallest weekly rise since early Feb * Shanghai copper stocks rise to highest in nearly a decade * Euro drops versus dollar By Harpreet Bhal LONDON, March 2 (Reuters) - Copper prices steadied on Friday, after rising more than 1 percent in the previous session following reassuring manufacturing data from China, but continued concerns about slow demand from the metal's top consumer prevented further gains. Benchmark copper on the London Metal Exchange (LME) dipped 0.1 to $8,618.50 a tonne at 1026 GMT, from Thursday's close of $8,630 a tonne. The metal earlier hit a session high of 8,670 a tonne, not far from the year's peak of $8,765 reached in early February. The metal has gained more than 13 percent so far this year. But demand from China - which consumes 40 percent of the world's copper - has yet to pick up strongly after the Lunar New Year in January, raising worries that prices could retreat sharply. Data released on Thursday, which showed an index measuring China's manufacturing activity at a five-month high, served to moderate the concerns about an economic slowdown. Analysts said the direction for the weeks ahead will be driven by macroeconomic data and investors will look for signs of any increase in copper demand from China. "If we were to get a few more numbers that were a bit disappointing the markets would start to become nervous about the growth outlook so price direction over the next couple of weeks is going to be very much influenced by the flow of economic news," said Gayle Berry, analyst at Barclays Capital. Also weighing on prices was a drop in the euro versus the dollar. A strong dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies. Copper is heading for its second straight weekly gain, which at 1.3 percent so far would be the smallest weekly rise since early February. Some analysts said copper will remain trapped in narrow ranges unless Chinese demand perks up. "Copper is a flat story at the moment. Chinese demand used to be the driver, but now it looks like it's a dragger," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong. SHANGHAI INVENTORIES RISE Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.5 percent to 221,487 tonnes, weekly data from the exchange showed on Friday, the highest level since August 2002. "It's a combination of too much metal having been imported and a slow recovery in buying after the Chinese New Year," Barcap's Berry said. "The big question going forward is whether we see a seasonal pickup in demand. And if so how quickly that bonded metal gets sucked into the system because that is going to be a big influence over copper prices over the next few months." Meanwhile, copper stocks in warehouses monitored by the LME fell to a 2-1/2 year low of 289,000 tonnes, down 3,250 tonnes, with the ratio of cancelled warrants to total stocks at 34.31 percent, with most of the tonnage in U.S. locations. In other metals, aluminium slipped to $2,344 from Thursday's close of 2,353 a tonne. Zinc was at $2,118.25 from Thursday's close of $2,105 a tonne while lead was at $2,183 from $2,163 a tonne. Tin was at $23,800 from a close of $23,775 while nickel was at $19,548 from $19,500. Metal Prices at 1032 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 392.00 -0.80 -0.20 444.70 -11.85 LME Alum 2344.00 -9.00 -0.38 2470.00 -5.10 LME Cu 8616.00 -14.00 -0.16 9600.00 -10.25 LME Lead 2181.25 18.25 +0.84 2550.00 -14.46 LME Nickel 19530.00 30.00 +0.15 24750.00 -21.09 LME Tin 23800.00 25.00 +0.11 26900.00 -11.52 LME Zinc 2116.75 11.75 +0.56 2454.00 -13.74 SHFE Alu 16270.00 75.00 +0.46 16840.00 -3.38 SHFE Cu* 61330.00 1040.00 +1.72 71850.00 -14.64 SHFE Zin 16075.00 185.00 +1.16 19475.00 -17.46 ** 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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