* Better US labor market data helps copper demand view
* Month-end buying, stronger euro also lifts metal prices
* Coming Up: On Friday, Advanced U.S. Q2 GDP, sentiment
(Adds New York closing prices, comment. Recasts. Changes byline, dateline.)
NEW YORK, July 29 (Reuters) - Copper hit a three-month high on Thursday as the euro too strengthened to a 12-week peak on month-end buying and as investors took their cue from improved U.S. labor market data to add riskier assets like industrial metals, betting on an better demand prospects.
Benchmark copper CMCU3 on the London Metal Exchange closed at $7,231 a tonne from Wednesday's last price at $7,165. Earlier, the metal used extensively in power and construction hit $7,283, its highest since May 4.
In New York, benchmark September COMEX copper futures HGU0 set their highest close since May 3 at $3.29 per lb, up 4.45 cents, or 1.37 percent.
Copper set early gains after an unexpected decline in the number of first-time filings for unemployment benefits in the United States, suggesting demand prospects may be on the mend.
"Even though we saw a little bit of a pullback today people are continuing to feel more optimistic about the economy going forward. They continue to put on the risk trade, whether in commodities or equities. I think that's the biggest thing fueling buying right now," said Matthew Zeman, head of trading with LaSalle Futures Group in Chicago.
New claims for unemployment benefits fell slightly more than expected last week, offering a ray of hope for the anemic labor market. STORY: [ID:nN28202832] TABLE: [ID:nLLATIE62M]
The industrial metal held onto its lofty levels for the rest of the session, helped by a rising euro, which tends to give buyers in overseas markets an advantage.
The euro hit a 12-week high against a broadly weaker dollar, as month-end demand and supportive data helped push the single currency above a key technical barrier. [USD/]
"A surge in the euro/dollar on month-end flows gave the complex a lift ... there were some good earnings reports from auto makers, and supply news was bullish," said David Thurtell referring to stocks in LME warehouses.
Stocks of copper in LME warehouses rose above 555,000 tonne in February, their highest since 2003. They now stand at around 411,000 tonnes. <0#LME-STOCKS>
But material already earmarked for delivery stands at a hefty 8.6 percent for copper. <0#MCUSTX-LOC-GRD>
The red metal also benefited from month-end buying as some funds sought extra yield before they close their July books.
"A lot of money the money managers like to buy at the end of the month to show that they're in the market," said Zeman.
Zeman added, however, that he doubted copper's ability to build on current levels unless economic data shows stronger increases than forecast.
On Friday, the first release of U.S. second quarter GDP is due. At 2.5 percent, it is projected to show a lower rate of growth than first quarter's 2.7 percent pace. [ECI/US]
Separate reports on manufacturing sectors in New York and Chicago are also due on Friday, along with Reuters/University of Michigan sentiment survey. All three are forecast to come in near or below the previous month's readings.
"The last two to three weeks we've moved back into a risk-on mode. There are some fundamentals that are supportive. In most cases LME stocks continue to decline, but it's more a risk-on thing," said BNP Paribas analyst Stephen Briggs.
Aluminium CMAL3 ended at $2,093 a tonne from $2,068 on Wednesday. Galvanising metal zinc CMZN3 was untraded at the close, but bid at $1,990 from $1,955. Aluminium and zinc touched $2,113 and $2,005 a tonne respectively, their highest since mid-May.
Tin CMSN3 closed at $19,600 from $19,525 on Wednesday and nickel CMNI3 at $20,675 from $20,405. Lead CMPB3 ended at $2,050 from $2,018 on Wednesday. Earlier in the Thursday session it saw $2,057 -- a two-and-a-half-month high. Metal Prices at 3:43 EDT (1943 GMT) Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 329.90 0.00 +0.00 334.65 -1.42 LME Alum 2090.00 22.00 +1.06 2230.00 -6.28 LME Cu 7250.00 85.00 +1.19 7375.00 -1.69 LME Lead 2035.00 17.50 +0.87 2432.00 -16.32 LME Nickel 20650.00 245.00 +1.20 18525.00 11.47 LME Tin 19550.00 25.00 +0.13 16950.00 15.34 LME Zinc 1980.00 25.00 +1.28 2560.00 -22.66 SHFE Alu 15385.00 -95.00 -0.61 17160.00 -10.34 SHFE Cu* 56220.00 20.00 +0.04 59900.00 -6.14 SHFE Zin 16235.00 20.00 +0.12 21195.00 -23.40 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Pratima Desai and Maytaal Angel in London;Editing by Sofina Mirza-Reid)