* Dollar index hits nearly two-month high * LME copper may fall to $8,342/T -technicals * Coming up: U.S. jobless claims, weekly; 1230 GMT (Adds details; updates prices) By Rujun Shen SINGAPORE, March 15 (Reuters) - London copper prices flatlined on Thursday, after dropping 1 percent in the previous session, as a strong dollar held sentiment in check while concerns about a slow recovery in demand in China also weighed on the market. The dollar rose to its highest in nearly two months against a basket of currencies, weighing on commodities priced in the greenback by decreasing the purchasing power of investors holding other currencies. London copper prices have seesawed between $8,400 and $8,600 this week, as investors weigh an overall improved global economic growth outlook against the disappointing copper demand recovery in China. "Any positive headline on the macroeconomy bodes well for copper, but eventually the market needs to heed the fundamentals. For copper, that is Chinese demand," said Zhu Bin, an analyst at Nanhua Futures in the eastern Chinese city of Hangzhou. "The demand this year is not looking particularly good, as the cycle of rapid economic growth driven by fixed asset investment is over and export-driven growth is also easing." Premier Wen Jiabao said on Wednesday China must embrace slower growth and bolder political reform to keep its economy from faltering. He also dampened hopes for any near-term easing measures in the country's property sector. Three-month copper on the London Metal Exchange was little changed at $8,459.50 a tonne by 0701 GMT, holding near the lower end of the trading range for this week. The most-traded June copper contract on the Shanghai Futures Exchange closed down 0.2 percent at 60,420 yuan a tonne. Zhu expects London copper prices to remain rangebound in the short term, with a possibility of testing $9,000 on more upbeat economic data. LME copper has risen 11 percent so far this year, after a 21 percent slide in 2011, on an improved situation in Europe, brightened economic outlook in the United States and hopes that easy monetary policies around the world would buoy asset prices. Technical analysis suggested that LME copper could fall to $8,342 a tonne during the day, according to Reuters market analyst Wang Tao. COPPER STOCKS Large amounts of copper have been moving from LME warehouses to China over the past few months, pushing Shanghai copper stocks to their highest in a decade, overshadowing a sluggish rebound in copper demand after the Lunar New Year holiday. LME copper stocks MCUSTX-TOTAL continued to fall, down 2,375 tonnes to 270,625 tonnes by March 13, the lowest level since July 2009. The ratio of canceled warrants -- materials earmarked for delivery -- to the total stocks remained high at 32.72 percent. Analysts said some Chinese companies were using part of the copper inflow as collateral to obtain credit or selling for cash to finance other investments, while real consumption remains sluggish. "Chinese corporations are surprisingly cautious on China right now," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, but added that Beijing's pro-growth policy should help support healthy base metals demand through the rest of the year. "Beijing has enough ammunition both on the fiscal and monetary side to shore up the markets when they need to, and we expect they will. They will be there to offer support to keep growth at a healthy 8.1 percent this year." Earlier this month, China cut its 2012 growth target to an eight-year low of 7.5 percent, though traders saw this figure as still good. Actual growth in the world's second largest economy has surpassed the government's target in the past years. Base metals prices at 0701 GMT Metal Last Change Pct Move YTD pct chg LME Cu 8459.50 -0.50 -0.01 11.31 SHFE CU FUT JUN2 60420 -110 -0.18 9.14 HG COPPER MAY2 384.65 -0.15 -0.04 11.95 LME Alum 2225.00 -4.00 -0.18 10.15 SHFE AL FUT JUN2 16280 -05 -0.03 2.75 LME Zinc 2076.00 2.00 +0.10 12.52 SHFE ZN FUT JUN2 15875 -30 -0.19 7.30 LME Nickel 19395.00 -180.00 -0.92 3.66 LME Lead 2110.00 8.00 +0.38 3.69 SHFE PB FUT 15850.00 -70.00 -0.44 3.70 LME Tin 23900.00 100.00 +0.42 24.48 LME/Shanghai arb^ 2380 Shanghai and COMEX contracts show most active months ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month

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