* Euro zone, U.S. debt problems fail to break copper
* China economy expands, more tightening seen
* Coming up: US housing starts, building permits Tuesday. (Rewrites, adds New York dateline/byline, updates with New York closing copper price, adds trader comments)
By Chris Kelly and Pratima Desai
NEW YORK/LONDON, July 18 (Reuters) - London copper ended up for a second straight day on Monday, recouping earlier losses and maintaining its positive momentum despite a host of discouraging macro-economic developments.
Even with debt default jitters in Europe and the United States remaining a constant head wind for global growth prospects, copper prices have barely budged, withstanding losses in other economically sensitive markets like crude oil, as investors remained confident of a falling supply base against an improved second-half demand outlook for the metal this year.
"Copper has been behaving well ever since we got the Chinese import data last week, and these supply glitches are keeping something of a floor under the market," said MF Global analyst Edward Meir.
London Metal Exchange (LME) benchmark copper CMCU3 ended up $22 at $9,694 a tonne.
In New York, prices failed to sustain late gains. The key September COMEX contract HGU1 eased 1 cent to settle at $4.4030 per lb.
Following a recent shake-out that saw prices lose about 15 percent of their value from the April highs, investors are now re-enterng the market in search of value.
"They are looking at things like copper, which still has a decent supply story," said Randy North, a trader at RBC Capital Markets.
A once-in-a-half-century winter storm hit mining operations in the northern part of top producer Chile this month, forcing more than half a dozen mines to halt operations or slow mining after dirt roads at their open pit operations became dangerously slippery.
While supply-side constraints in Chile and Indonesia played out, demand signals in top consumer China offered further evidence of a tightening market balance.
Recent data showed Chinese copper imports climbed 9.9 percent in June from a month earlier, suggesting the country's estimated 40 percent share of global copper consumption would not be impacted from a round of monetary tightening measures. [ID:nL3E7IA018]
Asia's major economies are set for a modest slowdown in coming months, while next year's growth prospects hinge on how quickly inflation cools at home and demand recovers abroad, a Reuters poll showed. [ID:nL3E7II11R]
RBC's North also expected to see a pickup in Japanese demand, with factory restarts nearly in full swing following the March earthquake and tsunami.
"All of that adds up to demand for copper," he said.
In the United States, debt default concerns remained. Failure to reach a deal to increase the debt ceiling could send shock waves through global financial markets and plunge the country into another recession, economists warned. [ID:nN1E76G06R]
The euro zone's debt problems also weighed on sentiment as Europe struggles to put together a second bailout for Greece and prevent the region's debt crisis from spreading. [ID:nL6E7II0FP]
"With global economic growth slowing, demand growth is set to decelerate this year," Bank of America Merrill Lynch said in a note. "High copper prices meant only subdued buying has emerged from commercial players."
BoA forecasts a deficit for the copper market this year and a "small deficit" for the aluminum market.
Three-month aluminum CMAL3 was untraded at the close, but last bid was at $2,495 a tonne from $2,494 at Friday's close.
Aluminum will be supported by changes in China, said Nic Brown, an analyst at Natixis.
"You can probably explain some of that by anticipation of a move from 13 percent to 9 percent rebate, which is encouraging aluminum exports, encouraging use of aluminium."
China is weighing whether to cut export rebates for some aluminum extrusion products to 9 percent from the current 13 percent and whether to abolish the 5 percent rebate for exporting stainless steel wires and rods. [ID:nL3E7FC0W] Metal Prices at 1801 GMT Metal Last Change Pct Move End 2010 Ytd Pct
move COMEX Cu 440.50 -0.80 -0.18 444.70 -0.94 LME Alum 2495.00 1.00 +0.04 2470.00 1.01 LME Cu 9694.00 22.00 +0.23 9600.00 0.98 LME Lead 2730.00 22.00 +0.81 2550.00 7.06 LME Nickel 23800.00 -355.00 -1.47 24750.00 -3.84 LME Tin 27350.00 150.00 +0.55 26900.00 1.67 LME Zinc 2431.00 56.00 +2.36 2454.00 -0.94 SHFE Alu 17675.00 250.00 +1.43 16840.00 4.96 SHFE Cu* 71910.00 290.00 +0.40 71850.00 0.08 SHFE Zin 18390.00 130.00 +0.71 19475.00 -5.57 ** 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 Susan Thomas; Editing by Jane Baird and Jim Marshall)