* U.S. August payrolls data below expectations
* Markets bet Fed will delay plans to taper stimulus
* Tin hits 5-month high on Indonesia supply worries
By Eric Onstad and Maytaal Angel
LONDON, Sept 6 (Reuters) - Copper rose on Friday after two days of losses as weak U.S. jobs data raised expectations that the Federal Reserve might delay plans to rein in its monetary stimulus, and as investors bet a global recovery would boost demand.
Three-month copper on the London Metal Exchange ended up 0.73 percent at $7,160 a tonne, after touching a session high of $7,217, reversing losses from the previous session.
“Should China continue to improve and the Fed reduce its asset purchases by less than expected, that’s very positive for metals. I see prices slightly higher by the year-end,” said VTB Capital analyst Andrey Kryuchenkov.
Data out earlier showed U.S. non-farm payrolls increased 169,000 last month versus an expected 180,000, while the unemployment rate hit a 4-1/2 year low as Americans gave up the search for work.
Markets took the report as a sign the Fed was less likely to make an announcement on the future of its bond-buying programme later this month. The dollar fell in response, making dollar-priced metals cheaper for non-U.S. investors.
Copper, recovering from a three-week low near $7,080 a tonne hit last week, is trading in a broad $7,000-$7,500 band, underpinned by the slow revival in the global economy but curbed by improving mine supply.
“Seasonally we’re going into a strong demand period and the underlying macro story seems to be getting better all the time. I think people have underestimated the strength of demand in China,” said analyst Daniel Smith at Standard Chartered in London.
“We still feel the risk is on the upside for copper. I don’t see any reason why we can’t get up to $7,500 in the next few months, although it’s only a mildly bullish story. We’re not gung-ho bullish because of the rising supply.”
LME prices were set for a weekly gain of around 1 percent, the first advance since mid-August.
Chinese data due out next week is expected to confirm that Beijing has prevented a sharp slowdown in its economy, after the government stepped in with policies to encourage investment and strengthen its hand to push through reforms.
China is the world’s top consumer of copper, accounting for around 40 percent of refined demand.
In the tin market, Indonesia’s only regulated tin exchange said it was fielding calls from potential buyers of the metal after new trading rules forced a top producer to stop shipments last week.
A shortfall in supply helped push up LME cash tin to the highest premium in three years at $125 on Wednesday . This moderated to $77 on Thursday.
“At the same time, there have been clear signs recently of an upturn in tin demand, and on our estimates the global tin market was already on course to record a small deficit this year before these latest developments in Indonesia,” analyst Duncan Hobbs at Macquarie said in a note.
LME three-month tin added to recent gains, jumping 4.08 percent to end at $22,950 a tonne. It had previously touched a session high of $22,998 - a level not seen since early April this year.
Tin has been the best performer among LME metals in the second half, rising about 16 percent.
Aluminium was last bid up 1.42 percent on the kerb at $1,823.50 a tonne, and lead climbed 1.22 percent to end at $2,150 a tonne.
Zinc ended at $1,894 a tonne, up 1.28 percent from Thursday’s close, while nickel ended at $13,980, up 1.82 percent.