LONDON (Reuters) - Copper shed almost 1 percent on Tuesday, dragged lower by worries that Chinese demand for industrial metals is easing and as the dollar firmed.
By 1014 GMT, copper for three month delivery on the London Metal Exchange fell to $4,687 from $4,720 at the close on Monday and compared with a session low at $4,605.
Prices of the metal, used in power and construction, have fallen off since a record high of $8,940 in July.
China's economic growth rate fell to 9 percent in the third quarter from 10.1 percent in the second quarter.
Factory output in China also dropped to a six-year low.
Adding to negative sentiment, the dollar hit its highest level in 1-1/2 years versus the euro and held near 16-month highs against a basket of currencies. Metals are priced in dollars, which makes them expensive for holders of other currencies when the dollar rises.
"We had some GDP (gross domestic product) data that came in slightly weaker than expectations, so we did see prices come off on the back of concerns that we're going to see a further slowdown in Chinese metals consumption growth," Gayle Berry, associate director at Barclays Capital, said.
"We're getting to the point where the market is pricing in near-recessionary demand levels for metals consumption."
China is the largest consumer of almost all of the base metals.
U.S. Treasury Secretary Henry Paulson is due to speak on China and the global economy at 2330 GMT.
UNCERTAINTY
Copper stocks in LME warehouses fell 6,500 tonnes to 205,900 tonnes -- still about 90 percent above the lows for this year seen in May.
In other figures, world refined copper consumption exceeded production by 54,000 tonnes between January and July this year, versus a deficit of 89,000 tonnes in the corresponding year-ago period, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
Expectations that the aluminium market will see a large surplus this year were reinforced by data showing stocks in LME warehouses rose 7,325 tonnes to 1,494,675 tonnes -- its highest since February 1995.
Aluminium prices have fallen in recent months as slowing economic conditions hit auto makers, one of the largest consumers of the metal.
Aluminium was at $2,139, little changed from Monday's price of $2,131. Analysts estimate that 75 percent of China's aluminium industry is making losses and falling copper prices could also soon completely erode margins for high-cost copper makers.
"Industrial metals had already been undermined by a weakening outlook for global economic growth ... The ongoing uncertainty and lack of confidence is likely to result in a further erosion of prices," Calyon said in a note.
Nickel was at $10,475 from $10,550 at the close in the previous session, lead down 2.4 percent at $1,386 from $1,420 and tin rose to $12,350 from $12,300.
Canada's First Nickel Inc said it suspended production at its Lockerby Mine and cut about 150 jobs due to low metal prices and a wider market slowdown.
Zinc gained 0.4 percent at $1,210 from $1,205.
The world's second-largest zinc miner, Oz Minerals Ltd , said it was considering closing its Century mine in Australia as zinc prices continue to fall.
