SHANGHAI, May 31 (Reuters) - London copper rose on Friday, supported by short covering after prices hit the lowest level of the year in the prior session and as investors had priced in disappointing Chinese manufacturing data in the world's biggest consumer of the metal.
Gains were likely to be limited, however, due to concerns over the European debt crisis, which has escalated in recent weeks on the prospect that Greece could exit the euro zone and on worries over Spain's shaky finances.
Three-month copper on the London Metal Exchange lifted 0.6 percent to $7,466.75 a tonne by 0146 GMT, after sinking to its lowest level price of $7,403 in 2012 in the prior session.
The most-active September copper contract on the Shanghai Futures Exchange lifted 20 yuan to 54,550 yuan ($8,600) a tonne after hitting a fresh 2012 low of 54,210 yuan earlier in the session. It fell 1.4 percent on Thursday.
"The markets had lowered its expectations of China's economic performance in May over the past few sessions and had priced in that pessimism along with fears over the euro zone. Short-coverers and some fresh longs have started to come in, but sentiment is still cautious," said CIFCO analyst Zhou Jie.
China's official purchasing managers' index (PMI) fell to 50.4 in May, the weakest reading this year and down from April's 13-month high in the latest sign that output in the world's second-biggest economy is cooling.
The European Central Bank stepped up pressure on Thursday for a joint guarantee for bank deposits across the euro zone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.
Private payroll growth accelerated only slightly in May and claims for jobless benefits rose last week, suggesting the U.S. labor market recovery was stalling after a strong performance early in the year.
Head of the International Monetary Fund Christine Lagarde denied on Thursday a media report that the Fund was considering contingency plans for a Spanish bailout. The report had caused Wall Street stocks to sharply cut losses.
The Federal Reserve could resort to more quantitative easing if the U.S. economy deteriorates, but this situation is unlikely as it is on track for a moderate recovery, an official of the U.S. central bank said on Thursday.
The euro hit a two-year low on Friday and was seen at risk of falling further in coming weeks, dogged by worries that Spain may need external aid to shore up its struggling banking sector and fix its public finances.
0230 China HSBC Mfg PMI Final May
0500 India HSBC Markit Mfg PMI May
0743 Italy Markit/ADACI Mfg PMI May
0753 Germany Markit/BME Mfg PMI May
0758 EZ Markit Mfg PMI May
1230 U.S. Non-farm payrolls May
1400 U.S. ISM Manufacturing May
1400 U.S. Construction spending April
Base metals prices at 0146 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7466.75 41.75 +0.56 -1.75
SHFE CU FUT SEP2 54550 20 +0.04 -1.94
LME Alum 2002.50 7.50 +0.38 -0.87
SHFE AL FUT SEP2 15955 -10 -0.06 0.73
HG COPPER JUL2 336.85 0.25 +0.09 -1.96
LME Zinc 1884.25 13.25 +0.71 2.13
SHFE ZN FUT SEP2 14820 25 +0.17 0.17
LME Nickel 16375.00 145.00 +0.89 -12.48
LME Lead 1925.00 4.00 +0.21 -5.41
SHFE PB FUT 15085 40 +0.27 -1.34
LME Tin 19600.00 0.00 +0.00 2.08
LME/Shanghai arb 873
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.3690 Chinese yuan)