LONDON, Jan 6 (Reuters) - Copper prices reached their highest since February 2013 on Wednesday as Democrats who want increased economic stimulus edged closer to control of the U.S. Senate and a blockade threatened to halt operations at a major mine in Peru.

Benchmark copper on the London Metal Exchange (LME) was up 0.5% at $8,039.50 a tonne at 1731 GMT, taking gains in January to around 3.5% after a 26% price rise in 2020.

Copper is used in power and construction and some analysts believe massive investment in green infrastructure and constrained supply will push prices higher in the coming years.

"New money is on the table from investors who see a very bullish story," said independent analyst Robin Bhar.

ELECTIONS: Democrats won one hotly contested Senate race in Georgia and pulled ahead in a second. Victory in both would give them control of the Senate.

MARKETS: As investors clamoured for riskier assets, European equities rose, China's blue-chip index reached a near 13-year peak and oil prices hit their highest since February 2020, although a slump in tech stocks weighed on U.S. markets. Government bond yields rose.

The dollar recouped early losses, hindering metals by making them pricier for non-U.S. buyers, but U.S. inflation expectations rose, a boost for commodities seen as an inflation hedge.

SUPPLY: Peru's Las Bambas mine could halt production due to a three-week-long roadblock protest by locals that has curtailed exports, a mining association leader said.

ECONOMY: The global economy is expected to expand 4% in 2021, the World Bank said, but warned that rising COVID-19 infections could limit recovery.

U.S. private companies shed workers in December for the first time in eight months, and economic activity in the euro zone contracted more sharply than previously thought at the end of 2020.

VIRUS: U.S. COVID-19 hospitalisations have risen to record levels, while China, the biggest metals consumer, imposed restrictions in a city near Beijing to stave off another wave of infections.

FACTORIES: Manufacturing remains a bright spot, however, with U.S. factory activity accelerating to its highest in nearly 2-1/2 years in December, echoing strong data from China and Europe.

OTHER METALS: LME aluminium was down 0.3% at $2,034 a tonne, zinc rose 1.8% to $2,862.50, nickel gained 0.6% to $17,785, lead fell 1.4% to $2,051 and tin was down 0.8% at $21,015.

(Reporting by Peter Hobson Additional reporting by Mai Nguyen; Editing by Kirsten Donovan and Barbara Lewis)