July 9 (Reuters) - Copper prices edged up marginally on Tuesday as buying from China improved, but gains were capped on caution ahead of the testimony of the U.S. Federal Reserve Chair Jerome Powell.

Three-month copper on the London Metal Exchange (LME) rose 0.3% to $9,946.50 per metric ton by 0757 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange (SHFE) edged up 0.2% to 80,480 yuan ($11,067.56) a ton.

"We think (the) price will be fairly strong in the next few sessions," said Matt Huang, head of research at BANDS Financial, adding that Chinese downstream demand has improved in the past two weeks while more bank liquidity being available to industrial players in China also supported buying since the end of last week.

The discount to import copper into China flipped to a premium of $3 a ton on Friday, but returned to zero on Monday and is still far below the premium level above $100 a ton seen in December last year.

"Most (physical copper buyers) have low warehouse stock level, so once the price drops, they buy more. (But) they don't build up stocks level.. (and only) buy the amount they need."

LME copper resistance level is seen around $10,200 a ton, Huang said.

Meanwhile, long positions on COMEX copper contract were last at 103,800 contracts, falling from above 140,000 in May but were still relatively high by historical standards.

"The overall sentiment is that they (funds) don't believe copper will go down. The consensus is that rate cut will likely happen in September," said Huang, adding that LME support level is around $9,800.

Markets participants were awaiting for clues on the path of interest rates from Powell's scheduled testimony before Congress on Tuesday and Wednesday.

LME aluminium edged up 0.1% at $2,534 a ton, nickel declined 0.9% to $17,320, zinc rose 0.1% to $2,957.50, lead fell 0.2% to $2,225.50 while tin advanced 0.4% to $34,345.

SHFE aluminium rose 0.4% to 20,460 yuan a ton, lead was nearly flat at 19,625 yuan, tin increased 0.8% to 279,980 yuan, while nickel dropped 0.6% to 137,430 yuan and zinc declined 0.7% to 24,410 yuan.

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($1 = 7.2717 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Mrigank Dhaniwala and Janane Venkatraman)