* China markets closed for Lunar New Year, to reopen on Friday
* China's factory growth slows to a six-month low in January
* U.S. ISM manufacturing PMI hits 8-month low in January
By Susan Thomas
LONDON, Feb 3 (Reuters) - Copper fell to a two-month low on Monday, with slowing factory growth in top consumer China and the United States compounding a deteriorating demand outlook for the metal.
China's factory growth eased to an expected six-month low in January, hurt by weaker local and foreign demand, heightening worries of an economic slowdown. Also, growth in China's services sector slowed to a five-year low in January.
China is the world's top user of most metals, accounting for around 40 percent of refined copper demand.
In the United States meanwhile, data showed manufacturing activity slowed sharply in January on the back of the biggest drop in new orders in years, suggesting the economy lost steam at the start of 2014.
The economic picture was also darkened by other U.S. data on Monday showing spending on construction projects barely rose in December.
Three-month copper on the London Metal Exchange ended at $7,038 a tonne, after falling to its lowest in two months at $7,025. It closed at $7,095 on Friday and lost 4 percent in January, its weakest month since June.
Trade volumes were thin, however, with China's stock, bond, foreign exchange and commodity futures markets closed from Jan. 31 through Feb. 6 for the Lunar New Year holiday.
"Sentiment does seem to have turned rather negative," Natixis analyst Nic Brown said. "There have been one or two relatively weak numbers out of China and of course the problems that all the other developing countries are having with their currencies in the face of further tapering by the Fed."
The U.S. Federal Reserve is reducing its huge asset purchase programme, which has partly prompted a bruising sell-off in emerging markets.
Financial markets in those countries have boomed in recent years as the Fed's measures to bolster economic growth at home - including ultra-low interest rates - encouraged investors to seek higher returns in emerging economies.
As the Fed began to talk of unwinding its policy last year, the money began to flow back out, a trend that ramped up again in the last two weeks on signs that China's economy is slowing.
China's government wants to reduce a heavy reliance on the investment and exports that have fuelled breakneck economic growth in the past three decades in favour of consumption and services, which it thinks will provide lower but more sustainable growth.
"I think it's difficult for base metal markets generally during the Lunar New Year because in the last few years you've had a situation where markets have expected strong Chinese growth after the holiday and it's taken longer than expected for Chinese industry to get fully up and running," Brown said.
"So there is naturally a bit of caution as a result of that."
Outside China and the United States, European manufacturers enjoyed a solid start to the year as order books swelled, offering limited relief for copper. Europe consumes around 20 percent of the world's copper.
Aluminium hit a fresh 4-1/2 year low of $1,674 per tonne, under pressure from record high inventories of the metal in warehouses. Benchmark LME aluminium ended at $1,677 per tonne from a close of $1,730 on Friday.
LME lead closed at $2,083.50 per tonne from $2,114 at the close on Friday, having earlier hit its lowest since mid December at $2,081 a tonne, while LME zinc ended at $1,956 per tonne from $1,982, having earlier hit its lowest since mid December at $1,950 a tonne.
Tin ended at $22,125 a tonne from $22,025 at the close on Friday, while nickel closed at $13,880 a tonne from $13,810.
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