* Zinc hits fresh 9-1/2 month high on supply tightness
* LME copper stocks at 10 month low
* Coming next: U.S. growth data; 1330 GMT
By Julia Fioretti and Silvia Antonioli
Dec 20 (Reuters) - Copper edged up on Friday, clawing back some ground after suffering its biggest fall in three weeks during the previous session, as investors absorbed the U.S. Federal Reserve's decision this week to start curbing its stimulus.
Benchmark copper on the London Metal Exchange (LME) untraded in official rings, was last bid at $7,248 a tonne, up from $7,201 but still below its two-month high of $7,290 hit on Monday.
The whole base metals complex pared losses sustained after the U.S. central bank ended months of market jitters by trimming its monthly bond purchases, which have flooded the market with cheap dollars, many of which found their way into riskier assets and commodities.
"In isolation really, metals reacted negatively yesterday to news of the Fed tapering," said BNP Paribas strategist Stephen Briggs.
"But when you look around...wider financial markets have taken it in their stride really, and so perhaps market thinking this morning (is) the reaction was a bit overdone."
Copper prices were also helped by declining stocks of the metal, which highlights tightness in near-term supply.
Inventories in LME-monitored warehouses fell 1,375 tonnes to 382,550 tonnes, the lowest level in more than 10 months, latest exchange data showed.
Stocks of copper in warehouses monitored by the Shanghai Futures Exchange also fell: they were 8.4 percent down from last Friday at 131,128 tonnes, the exchange said on Friday.
COPPER FOR FINANCING
In China, much copper is being used for financing instead of being consumed by end-users.
Chinese firms have used copper imports for years as a means to obtain loans, and some banks have also been allowing companies to use copper stored in LME warehouses.
That is particularly evident at this time given tight liquidity conditions in China which have sent benchmark interbank rates surging, according to UOB-Kay Hian Securities analyst Helen Lau said.
"I don't think the current copper price is sustainable because if liquidity remains tight, that will eventually lead to a decline in end-user demand," she said.
Zinc was the biggest gainer, trading in official rings at $2,036 a tonne from $1989.50 and marking a fresh 9-1/2 month high as supply tightness concerns continued to support prices.
In Indonesia, the world's top exporter of nickel ore, thermal coal and refined tin, the government is re-examining provisions in a mining law that would ban exports of unprocessed metal ores from next year.
Indonesia's plan to ban exports of unrefined nickel and other minerals could drive up shipping costs as Chinese importers seek new supplies from more distant sources such as Australia and New Caledonia.
Nickel traded up in official rings at $14,250 a tonne from $14,190, while tin also traded up in official rings at $22,900 a tonne from $22,850.
Aluminium traded in official rings at $1,785 a tonne from $1,773.50, and lead also gained, trading in official rings at $2,195 from $2,174.