METALS-Copper up on China PMI data; euro zone crisis to cap gains

* LME Copper jumps more than 1 pct after China PMI data
* HSBC flash China manufacturing PMI grew at fastest in 9
mths
* Spanish bond yields hit euro-era high above 7.5 pct
* Moody's cuts Germany's outlook to negative
* Coming up: Redbook weekly U.S. retail sales; 1255 GMT

(Updates prices; adds quotes, details)
By Carrie Ho
SHANGHAI, July 24 (Reuters) - London copper rebounded on
Tuesday after data showed July manufacturing output in top
metals consumer China grew at its fastest pace in nine months,
temporarily easing worries that Spain's debt problems may
undermine global demand for metals.
The HSBC Flash China manufacturing purchasing managers index
(PMI) rose to 49.5 in July from 48.2 in June, growing at the
fastest pace in nine months and nearing the 50 level that
divides expansion from contraction.
"China's PMI data beat market expectations and gave shorts a
reason to cover today," said Orient Futures derivatives director
Andy Du.
"But underlying sentiment is still bearish, given the
fragile state of the global economy, and we are not taking our
eyes off developments in the euro zone," said Du, signalling
that gains may be capped by worries over the troubled bloc.
China's PMI data helped three-month copper on the London
Metal Exchange jump 1.3 percent to $7,494 per tonne,
before giving up some gains to trade at $7,435.50 by 0728 GMT.
The contract had dipped to the lowest level since June 28 on
Monday after news that Spain might need to resort to a full
sovereign bailout.
The most active November copper contract on the Shanghai
Futures Exchange gained 0.2 percent to close at 54,500
yuan ($8,500) per tonne recovering from a three-week low of
54,170 yuan earlier in the session.
Spain's economy sank deeper into recession in the second
quarter, its central bank said on Monday, as a funding crisis in
its regions pushed the country closer to a full bailout and with
Spanish bond yields at a euro-era high above 7.5 percent.

Even Europe's strongest economies may not be immune to the
fallout from the region's debt crisis as Moody's Investors
Service on Monday changed its outlook for Germany, the
Netherlands and Luxembourg to negative from stable.

In Italy, the euro zone's third-largest economy which is
seen as the next weakest link after Spain, media reported that
ten cities faced problems managing their finances, underlying
growing concern about the sustainability of the country's local
finances.
Investors will likely trawl through factory activity and
other data out of the euro zone due later in the session for
more hints on how the single-currency region is faring. U.S. PMI
and retail data for July is also due to be released on Tuesday.
"The next important data to scour for trading cues are the
various PMI data out of Europe and the U.S. retail numbers
tonight. Should they turn out worse than expected, today's rally
could easily fade," a Shanghai-based trader said.
Market players are also waiting to see if property subsidies
given by the government of China's eastern city of Nanjing to
first-home buyers to will be the first of a wave of similar
measures in second-tier cities.
Many investors believe that relaxing the central
government's current tough restrictions on the property sector
would boost the economy and demand for industrial metals.
"It's hard to tell if Nanjing's move is a positive for the
base metals market yet, since the central government may clamp
down on this later. We need more time to see how it turns out,"
said CIFCO Futures analyst Zhou Jie.

Base metals prices at 0728 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7435.50 34.50 +0.47 -2.16
SHFE CU FUT NOV2 54500 130 +0.24 -2.03
LME Alum 1875.25 -2.75 -0.15 -7.17
SHFE AL FUT OCT2 15400 45 +0.29 -2.78
HG COPPER SEP2 337.70 -0.30 -0.09 -1.72
LME Zinc 1816.00 2.00 +0.11 -1.57
SHFE ZN FUT NOV2 14560 95 +0.66 -1.59
LME Nickel 15559.00 -41.00 -0.26 -16.84
LME Lead 1861.00 1.00 +0.05 -8.55
SHFE PB FUT 14880 75 +0.51 -2.68
LME Tin 18230.00 -120.00 -0.65 -5.05
LME/Shanghai arb 1022

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month

($1 = 6.3864 Chinese yuan)

(Editing by Chris Lewis and Miral Fahmy)