By Melanie Burton

MELBOURNE, Jan 8 (Reuters) - London copper rose on Tuesday

as the euro was supported by expectations the European Central

Bank will refrain from a rate cut this week, and on hopes

Chinese trade data will show a recovery is gathering steam in

the world's top metal consumer.

U.S. economic developments have also been dictating

short-term direction, given the quiet start to the calendar

year. Copper hit its highest in more than two months last week

after U.S. lawmakers struck a deal to avoid going over the

so-called fiscal cliff of devastating tax increases and spending

cuts.

But minutes from the latest Fed meeting signalled it may

rein in easing measures sooner than expected, somewhat souring

investor sentiment.

'Most of what we've seen so far in January has been

reactions to specific events in the U.S.,' said metals analyst

Ivan Szpakowski at Credit Suisse in Singapore.

'Now metals are steadying. It may be there is a sense that

they have been oversold in the short term,' he said, adding that

the euro's gains have also provided added support.

Three-month copper on the London Metal Exchange had

climbed 0.24 percent to $8,090.50 a tonne by 0150 GMT, reversing

small losses in the previous session.

Prices, which hit their highest since Oct. 18 at $8,256.50

on Jan. 3, have since dropped back, but are still up 2 percent

for the year.

The ECB will keep interest rates unchanged at its meeting on

Thursday, economists forecast in a Reuters poll.

The euro was steady against the dollar, buying

$1.3124, holding well above its three-week low of $1.2998

touched on trading platform EBS on Friday.

A weaker U.S. dollar makes commodities denominated in the

greenback more attractive to holders of other currencies.

The most-traded April copper contract on the Shanghai

Futures Exchange rose 0.21 percent to 58,340 yuan

($9,400) a tonne.

China's annual economic growth may have quickened to 7.8

percent in the fourth quarter a Reuters poll showed, snapping

seven straight quarters of weaker expansion while its export

growth probably rebounded from three-month lows in December.

China is the world's biggest copper consumer, accounting for

40 percent of refined demand.

The trade data, which includes initial estimates for metals

imports and exports, is due on Thursday.

INDEX REBALANCING BEGINS

The annual S&P GSCI and DJUBS commodity

indices began their annual rebalancing process this week, which

will result in erratic trade with selling pressure seen in

aluminium and zinc, brokers said.

'We would expect the nearby spreads to be offered for the

next few days as the index rolls start up... and for aluminium

and zinc to underperform as the Dow Jones/UBS Commodity Index

rebalance sees selling interest hitting on the close for the

next few days,' said RBC Capital in a note.

According to Morgan Stanley research, a net decline in the

Dow Jones-UBS aluminium weighting to 4.9 percent from 5.9

percent should result in sales of 14,621 lots of aluminium, just

under 3 percent of total futures contracts open interest.

A decline in zinc weighting to 2.5 percent from 3.4 percent

in the index should result in sales of 14,144 lots, more than 8

percent of total open interest.

PRICES

Base metals prices at 0150 GMT

Metal Last Change Pct Move YTD pct chg

LME Cu 8090.50 19.50 +0.24 2.04

SHFE CU FUT APR3 58340 120 +0.21 1.14

HG COPPER MAR3 368.25 0.45 +0.12 0.82

LME Alum 2070.00 5.00 +0.24 -0.05

SHFE AL FUT MAR3 15265 00 +0.00 -0.52

LME Zinc 2033.75 12.75 +0.63 -1.44

SHFE ZN FUT APR3 15470 -75 -0.48 -0.48

LME Nickel 17400.00 190.00 +1.10 1.43

LME Lead 2312.00 7.00 +0.30 -1.20

SHFE PB FUT 15150.00 -20.00 -0.13 -0.66

LME Tin 24050.00 0.00 +0.00 2.78

LME/Shanghai arb^ 744

Shanghai and COMEX contracts show most active months

($1 = 6.2296 Chinese yuan)

(Reporting by Melanie Burton; Editing by Joseph Radford and

Muralikumar Anantharaman)

((melanie.burton@thomsonreuters.com)(+65 6870 3017)(Reuters

Messaging: melanie.burton.thomsonreuters.com@reuters.net))

(Reuters 3000Xtra subscribers can access Metals Production Database by clicking on URL below http://mpd.session.rservices.com For related news and prices, click on the codes in brackets: LME price overview COMEX copper futures Base metals news All metals news All commodities news Metals diary Foreign exchange rates SPEED GUIDES)

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