* Chinese manufacturing data below expectations
* U.S. manufacturing grows, jobless claims fall
* Zinc retreats from 10-month peak
By Julia Fioretti and Harpreet Bhal
LONDON, Jan 2 Copper rose to a seven-month high on Thursday, lifted by shrinking supplies and prospects for global economic recovery, though signs of weakness in top consumer China capped gains.
Three-month LME copper reached its highest since June 5 at $7,460 a tonne and closed at $7,393 from the previous close of $7,360.
The metal used in power and construction fell 7.2 percent in 2013 but gained more than 4 percent in December, posting its biggest monthly rise since September 2012.
Copper's yearly decline was more modest than many expected as an expected surge in new mine production was stymied by processing backlogs. These have limited the amount of refined metal being produced and prices have failed to fall significantly.
Copper's rise on Thursday was restrained by a survey showing China's factory activity expanded at the slowest pace in three months in December, weighed down by shrinking export orders.
"China's PMI numbers showed momentum is waning. I expect that a sell-off is on the cards," said Gianclaudio Torlizzi, partner at T-Commodity.
"Potentially copper might reach $7,600 before turning down."
China accounts for as much as 40 percent of global demand for refined copper.
"With the focus on copper in recent months having been mostly centred around the prospect for increased availability of supply, the continued pick up in demand as evidenced through the drop in inventory levels has forced traders to switch their focus," said Ole Hansen, head of commodity strategy at Saxo Bank.
Copper stocks in LME-monitored warehouses dropped a further 725 tonnes to 366,485 tonnes on Thursday, the lowest level since January 2013, exchange data showed.
In a sign of resilience in the United States, the world's largest economy, a gauge of factory activity held near a 2-1/2-year high in December and the number of Americans filing new claims for jobless benefits fell for a second week last week.
In other metals, zinc closed at $2,075 a tonne from its previous close of $2,055.5 a tonne. Analysts believe that mine closures will squeeze the oversupplied market and drive prices higher.
It hit a 10-month peak of $2,108 on Dec. 27 and was the top performer among industrial metals in 2013, losing only 1.2 percent compared with aluminium's 13.2 percent tumble.
Tin closed at $22,075 a tonne from its previous close of $22,350, while lead closed at $2,221 a tonne from its previous close of $2,219 a tonne.
Aluminium closed at $1,803 a tonne against its previous close of $1,800, while nickel finished the day at $14,025 a tonne, up from a previous close of $13,900.
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