* Easing political tension over Ukraine supports risk appetite
* European equities recover from two-week slide
* Cash to three-month aluminium at narrowest since Dec '12 (Updates with closing prices)
By Harpreet Bhal
LONDON, Aug 11 (Reuters) - Copper steadied on Monday as the easing of tensions between Russia and Ukraine and optimism about the outlook for China's economy and metals demand offset expectations of rising copper supplies.
Three-month copper on the London Metal Exchange (LME) closed at $6,995 a tonne, flat from the close on Friday. It ended last week lower for the second week in a row, down 1.1 percent.
Russia's defence ministry said on Friday it had finished military exercises in southern Russia, which the United States had criticized as a provocative step in the Ukraine crisis.
Global stocks bounced after recent sell-offs, and core government debt prices fell on Monday as markets saw receding risks of direct conflict between Russia and Ukraine, while Middle East tensions diminished.
"There are indications of some easing in geopolitical tension over the weekend, and that is helping the equity markets. Base metals are benefiting from that," said Nic Brown, head of commodity research at Natixis.
Investors were monitoring the situation in the Middle East, with a focus on turmoil in Iraq and on talks in Cairo between Israel and the Palestinians on ending the month-old Gaza conflict.
Robust Chinese export numbers on Friday pointed towards healthy metals use. But solid trade data has yet to be seen globally, with particular questions over the impact of Russian sanctions on the European economy and demand for metals.
This week, industrial production data from China and the United States should paint a clearer picture about the health of the global economy.
"The data from China has been improving for a while now, and the gradual loosening of monetary conditions has been supportive to growth," Brown said.
Investors are concerned, however, that prices for the metal used in power and construction are likely to come under pressure in the second half due to rising supply.
The copper market is expected to be in a 226,000 tonne surplus by the end of 2014, a Reuters poll in July showed, with the surplus seen rising to 285,000 tonnes in 2015.
Reflecting a drop in enthusiasm for copper holdings, hedge funds and money managers cut their bullish bets in copper markets in the week to Aug. 5, the Commodity Futures Trading Commission said on Friday.
In other metals, aluminium closed at $2,033.50 a tonne, down from a last bid of $2,024 on Friday. The discount to three-month prices CMAL0-3 narrowed to $4.25 per tonne on Friday, reflecting tightening supplies.
LME zinc closed at $2,304 a tonne from $2,295 at the close on Friday. Prices have been weighed down by rising inventories, with LME stocks increasing by more than 5 percent this month. MZNSTX-TOTAL
Lead closed at $2,257 a tonne from $2,240 on Friday and nickel at $18,650 a tonne from $18,560. Tin closed at $22,400 from a last bid of $22,375 on Friday.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
(Additional reporting by Melanie Burton in Sydney; editing by Jane Baird and David Clarke)