By Harpreet Bhal and Maytaal Angel

LONDON, Jan 29 (Reuters) - Copper edged up on Tuesday as

optimism about economic recovery gathered pace following

comments over growth in top consumer China, though gains were

limited by improved supply prospects and caution ahead of a

Federal Reserve policy meeting.

A two-day Fed meeting concludes on Wednesday with investors

awaiting clues on when the central bank will unwind its

ultra-loose monetary policy. They were also reluctant to make

big bets following mixed U.S. economic data.

A report earlier showed U.S. consumer confidence dropped in

January to its lowest in more than a year, though a separate

report showed U.S. single-family home prices rose in November,

adding further evidence of a housing market recovery.

China's top think tank lifted its economic growth forecast

for 2013 to 8.4 percent from 8.2 percent, with faster expansion

seen in the first half of the year.

Three-month copper on the London Metal Exchange

traded up at $8,102 a tonne at 1556 GMT, from a close of $8,050

on Monday. The metal's year-to-date gains amounted to just under

2 percent.

'On the one hand macro newsflow (U.S. consumer data to one

side) is better, and that probably includes China. But on the

other hand there is a sense of more supply coming through in

most metals markets. Net net, the balance is much as it was and

prices are range-bound,' Macquarie analyst Duncan Hobbs said.

A Reuters poll last week showed analysts expect new supply

to push the market into a surplus of 120,000 tonnes in 2013.

MORE THAN ENOUGH LIQUIDITY?

Investors were looking to U.S. fourth-quarter gross domestic

product estimates on Wednesday and non-farm payrolls on Friday

for fresh signs that a fledgling recovery in economic growth is

taking root.

Further signs of brightening U.S. growth prospects, however,

could fuel speculation the Federal Reserve may consider pulling

back on aggressive easing stimulus.

'The market is giving that impression (of confidence in the

economic recovery) in the way that risky assets generally appear

to be going up. But is that genuinely a reflection of economic

expectations, or is that as much a reflection of the amount of

liquidity that is being put to work in the market?' said Nic

Brown, head of commodity research at Natixis.

'We may find out more by listening to the Fed. At their last

meeting they talked about potentially slowing the rate of

purchases within QE3. If we get any more talk like that, it

would be an interesting signal that the Fed thinks that there is

more than enough liquidity in the system.'

Also on the data calendar for the week are China's official

purchasing manager's index (PMI) and HSBC's final PMI for

January, which are expected to show an uptick in activity in the

world's No.2 economy.

Chinese buying has remained subdued ahead of the Lunar New

Year holiday. China's markets will be closed from Feb. 11 to

Feb. 15. China accounts for 40 percent of refined copper

consumption.

In other metals, soldering metal tin traded up at

$24,614 a tonne from $24,400 on Monday, while zinc, used

in galvanizing, was at $2,092.75 a tonne from $2,081 a tonne.

Chinese investors, who boosted zinc imports by almost 50

percent last year, will continue to use the metal as a financing

tool in 2013, a move that would support global premiums of the

metal but curb domestic production, traders said.

Battery material lead was at $2,394 from Monday's

close of $2,378, while aluminium was at $2,048.25 a

tonne from $2,050, and stainless-steel ingredient nickel

was at $17,797 a tonne from $17,625.

(Additional reporting by Melanie Burton in Singapore; editing

by Keiron Henderson and Jane Baird)

Keywords: MARKETS METALS/

(harpreet.bhal@thomsonreuters.com)(+44 0207 542 4533 Reuters Messaging: harpreet.bhal.thomsonreuters.com@reuters.net)

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