NEW YORK, Oct 11 (Reuters) - New York copper extended gains of...

NEW YORK, Oct 11 (Reuters) - New York copper extended gains of the last two days on Thursday, helped by the dollar's weaker tone against the euro and a set of U.S. data showing an improving economic scenario, traders said.

Asked if he thought dollar weakness was behind copper's latest rise, Steve Platt, analyst at Archer Financial Services, said, "Oh, yeah. No doubt. Given strength in the stock market, still seems like there's sufficient liquidity in the global financial system to maintain growth, probably tipping it to almost too much. I think that's helping support these metals."

"Also," he said, "seeing a lot of people move to hard assets, I wouldn't be surprised if things are a bit overbought. But it still seems to be a go-go move on commodities."

Copper for December delivery (HGZ7: Quote, Profile, Research) on the New York Mercantile Exchange's COMEX division climbed 1.60 cents to $3.71 a lb. Earlier, it pushed up to its highest level in three days at $3.7320 from a higher low for the third consecutive day at $3.6725. On Monday, it slid to $3.5810, a two-week low.

COMEX estimated 10 a.m. EDT copper volume at 4,339 lots. Open interest rose by 381 to 86,905 lots by Tuesday.

Traders said volume was thin all week, with base metal market players assembled from around the world in London for the annual London Metal Exchange events.

The euro gained for a third straight day against the dollar as currency traders continued to worry the Federal Reserve may still lower key U.S. interest rates.

A weaker dollar tends to make dollar-denominated assets like copper more attractive to overseas investors.

The dollar cut some of its losses against the euro when the U.S. trade deficit narrowed in August and trimmed its July shortfall. Imports fell, a sign consumers may be buying less, and exports rose to a record level, showing the declining dollar and economic growth overseas are making U.S. goods more attractive in markets abroad.

"You're seeing the (weaker) dollar generate some growth here, which is good for the U.S. economy," said Platt.

Keith Hembre, chief economist at FAF Advisors in Minneapolis, said the August trade data could, if repeated in September, add 1 percent to third-quarter U.S. economic growth, "bringing it to roughly 3 percent."

"That compounds the problem for the Fed. Now, I think it's hard for them to back off the lower rates," said Platt.

Exports to China also set a record in August.

At the same time, the Labor Department reported that claims for U.S. jobless benefits fell sharply in the latest week.

"Great numbers. U.S. trade and initial jobless claims both better than expected, with the U.S. trade deficit smaller than expected on a weaker dollar. We take another step away from the hard-landing scenario that people feared for 2008," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon in New York.

London Metal Exchange copper for delivery in three months (MCU3: Quote, Profile, Research) slipped to $8,140 a tonne off Wednesday's $8,210 close.