London copper rose on Tuesday, the first trading day of the year, as an expansion in China's manufacturing boosted hopes that demand for industrial metals will increase, but investors remained cautious as Europe's debt crisis persists.

The metal posted its first annual decline in three years in 2011 when it lost a fifth of its value on fears related to the euro zone debt crisis and the global economic slowdown.

China's PMI number looks positive, better than most people had expected earlier on, said Huang Yiping, chief economist for emerging Asia at Barclays Capital in Hong Kong.

But caution remains in the market. The euro zone economy is declining, it's in negative growth.

The euro zone accounts for than 20 percent of China's export market, Huang said.

Three-month copper on the London Metal Exchange climbed 1.3 percent to $7,699 (4,937.79 pounds) a tonne by 06:53 a.m. BT, extending gains from the last trading session on December 30.

The Shanghai Futures Exchange is closed for a holiday.

China's official purchasing managers' index (PMI) rose to 50.3 in December from 49 in November, indicating a slight expansion in business activity in the factory sector.

Copper prices may stay up as workers at Freeport McMoran Copper & Gold Inc's Indonesia unit delayed their return to work at the world's second-largest copper mine after a three-month strike over a labour dispute.

LME copper faces a resistance at $7,689 a tonne and only a rise above this could open the way to $7,887, according to Reuters technical analyst Wang Tao.

Europe is a worry and if we see an implosion there, I suspect China will work quickly as they did in the global financial crisis to bring its firepower to bear on supporting things domestically, said Nick Trevethan, a senior commodities strategist at ANZ Research in Singapore.

Euro zone manufacturing activity declined for a fifth consecutive month in December, although at a slightly slower rate than November's 28-month record low, a survey showed on Monday, suggesting the decline would continue in the early months of 2012.

(Editing by Sugita Katyal)