* Inventory flows, China news brighten demand outlook
* Coming up: U.S. FOMC policy announcement on Tuesday (Changes headline, updates with New York closing copper price, adds New York dateline/byline and analyst comments)
By Chris Kelly and Michael Taylor
NEW YORK/LONDON, Aug 9 (Reuters) - Copper prices ended slightly higher on Monday, boosted by expectations of healthy demand from top-consumer China, but gains were limited in front of a U.S. Federal Reserve monetary policy announcement on Tuesday.
"I think a lot of the markets today are just sort of on hold ... the Fed meeting will be an important one," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
(For a preview of the Fed meeting, see [ID:nN06209685])
Copper for September delivery HGU0 on the COMEX metals division of the New York Mercantile Exchange rose 1.10 cents to settle at $3.3540 per lb, after dealing from $3.3360 to $3.3940.
Last week, the key September contract hit a three-month peak of $3.4105.
On the London Metal Exchange, benchmark copper CMCU3 ended up $55 at $7,425 a tonne, near an early session high of $7,489.
Sentiment got a lift from overnight comments by a leading Chinese government economist who said China's economy will enjoy a strong, stable second half, putting it on course for full-year growth of about 10-11 percent. [ID:nTOE67800E]
"That's a little hotter than original estimates of around 8 or 9 percent," Future Path's Lesh said.
"When you're the biggest commodity buyer and user in the world, you matter to the market."
China is the world's largest copper consumer, accounting for more than 30 percent of the global market estimated at around 19 million tonnes this year.
The market is waiting for a raft of data from China this week, including July imports and exports. ECONCN
However, traders said there were doubts about the strength of demand for industrial metals in the United States, the world's largest economy, after a weak monthly jobs report suggested growth could be faltering. [ID:nN05598486]
That is one reason why the dollar was weaker, making metals cheaper for holders of other currencies. [USD/]
ALUMINUM CONTANGO NARROWS
Aiding overall sentiment in recent months has been a growing trend of falling LME inventories and canceled warrants -- material earmarked for delivery from LME warehouses.
Copper stocks fell 2,150 tonnes to 410,475 tonnes, having fallen from 6-1/2 year highs of 555,075 tonnes in mid-February.
Aluminum CMAL3 closed at $2,182 a tonne from Friday's last bid at $2,190. LME stocks for the metal slipped 6,025 tonnes to 4.39 million tonnes after hitting a record high above 4.6 million in late January. <0#LME-STOCKS>
BNP Paribas expects the aluminum market to see a 2.20 million tonne surplus this year from 1.95 million tonnes last year. It estimates global demand at 39.55 million tonnes in 2010 from 35 million tonnes in 2009.
Worries about near-term supplies have narrowed the contango -- the discount between the cash and three-month contracts MAL0-3 -- to about $9 a tonne from $33 a tonne mid-June.
In other metals, nickel touched $22,898 a tonne and zinc saw $2,175 -- their highest levels since May 13.
Zinc CMZN3 ended at $2,150 a tonne from $2,129 on Friday and nickel CMNI3 at $22,800 from $22,075.
Colin Hamilton, analyst at Macquarie, said the current nickel prices may not be sustainable.
"We are seeing the rising nickel price reincentivise some nickel pig iron production in China ... and the stainless steel market is softening," he said.
Lead CMPB3 closed up $35 at $2,200 a tonne and tin CMSN3 was untraded at the close but bid at $21,300 from a last bid of $20,725 on Friday.
Zinc canceled warrants as of Friday were at 64,575 tonnes compared with 20,150 tonnes on Aug. 4, or 10 percent or total LME stocks at 617,700 tonnes.
Tin canceled warrants account for 10 percent of total LME stocks at 14,895 tonnes. It earlier touched $21,500, its highest level since August 2008. Prices are up about 26 percent so far this year, with further gains expected. [ID:nLDE66I1UK]
Metal Prices at 1828 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 336.25 1.95 +0.58 334.65 0.48 LME Alum 2180.00 -23.00 -1.04 2230.00 -2.24 LME Cu 7410.00 40.00 +0.54 7375.00 0.47 LME Lead 2190.00 25.00 +1.15 2432.00 -9.95 LME Nickel 22775.00 700.00 +3.17 18525.00 22.94 LME Tin 21250.00 775.00 +3.79 16950.00 25.37 LME Zinc 2142.00 13.00 +0.61 2560.00 -16.33 SHFE Alu 15615.00 55.00 +0.35 17160.00 -9.00 SHFE Cu* 58250.00 440.00 +0.76 59900.00 -2.75 SHFE Zin 17610.00 335.00 +1.94 21195.00 -16.91 ** 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 Pratima Desai in London; editing by Jim Marshall)