(Reuters) - London copper eased on Monday on persistent worries over global economic growth after two indicators showed China's factory sector is still shrinking, while concerns over Spain's banks and prospects for a bailout curbed appetite for risk.

Asia's manufacturers are continuing to struggle in the face of tepid demand from the United States and Europe, according to business surveys and data releases on Monday that underlined the fragility of the global economy.

China's economy offered more evidence of a seventh straight quarter of slowing growth on Monday, with an official survey of factory managers remaining in contractionary territory for a second successive month.

This followed on from a private sector China PMI survey published on Saturday which pointed to a month in which a slide in the rate of economic growth was halted but not reversed.

China is the world's top consumer of most metals, accounting for 40 percent of refined copper demand last year.

"The PMIs do confirm our view that Chinese policy has really failed to gee-up the economy significantly, and we still see a need for more RRR cuts," said Nick Trevethan, a Singapore-based commodities strategist at ANZ, referring to the country's reserve requirement ratio.

"On copper we see the downside limited to around $7,800, but later in the year we would expect to see prices rise again as the market starts to price in an improving demand outlook in Q1 and Q2 -- maybe $8,400 by the end of the year -- but we don't expect any fireworks."

Three-month copper on the London Metal Exchange slipped 0.41 percent to $8,171.50 a metric ton by 0704 GMT, reversing a small advance seen the previous session.

LME copper ended the third quarter steady from the second, despite a raft of easing measures unleashed by the U.S. Federal Reserve and the European Central Bank, as well as targeted fine-tuning by China.

Prices, down by more than 12 percent in June, have rallied to post gains of nearly 8 percent this year, however.

More data due to be released later on Monday is expected to confirm that the euro zone is mired in recession while the prospects of a firmer U.S. recovery remain delicately balanced.

The Shanghai Futures Exchange is closed this week for a national holiday.

Adding to headwinds for metals, the euro fell to a three-week low in on Monday, after an independent audit of Spain's banks failed to quell concerns about the country's progress towards a bailout needed to shore up its public finances.

A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies.

Still, a physical trader in Singapore said there were small amounts of speculative buying of copper, although the holidays in China and the weaker euro were signaling early losses into the European time zone.

Expectation of lower demand from China have led Codelco, the world's No.1 copper producer, to seek to reduce 2013 physical copper premiums to Asian buyers by about $5, while its European rate will likely be held or trimmed by a smaller amount, a source linked to the company told Reuters.

Meanwhile, miner Xstrata (XTA.L) gave its long-awaited blessing to trader Glencore's (GLEN.L) revised $33 billion offer on Monday, though only on condition shareholders also support a controversial pay package aimed at retaining key managers for at least two years.

(Reporting by Melanie Burton; Editing by Joseph Radford and Miral Fahmy)

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