Copper fell nearly 3 percent on Friday to snap four successive sessions of gains, as investors banked profits and concerns mounted over global demand. Adding to the negative demand outlook, production at Japanese factories fell 10 percent in January from the previous month as exports of cars, auto parts and electronics tumbled and manufacturers tried to clear unsold stocks. "The recent rally in base metals has been overdone," Dan Smith, an analyst at London's Standard Chartered said. "We've got to remember that the demand backdrop for most of these markets is still exceptionally weak. "If you look at Japan -- it's still incredibly important for base metals ... these kind of factors are more important for base metals, the fact that Japan is so weak." By 0942 GMT, copper for three month delivery on the London Metal Exchange fell to $3,424 a tonne from $3,500 at the close on Thursday and compared with a session low at $3,405. Prices of the metal used in power and construction have fallen about 60 percent since a record high of $8,940 in July 2008 but are up 8 percent for the week. China's State Reserves Bureau has been buying metals to support loss-making local smelters at a time of slumping global demand. "The recovery in China is a little bit doubtful," said Smith. "There has been an improvement but it's based on very shaky foundations." China is the world's largest consumer of industrial metals and for a significant turnaround in metal prices, an improvement in growth there, needs to be seen. "For China, a considerable growth slowdown is clearly in train but there are now material risks of an outright decline in the level of GDP," said Lombard Street Research in a note. INVENTORIES LME inventories of copper fell by 3,175 tonnes to over half a million tonnes, with cancelled warrants rising to 37,600 tonnes. Highlighting the weakened state of copper prices, Europe's top copper miner KGHM reported its fourth-quarter net profit fell by half but beat market consensus thanks to hedging operations. Aluminium fell 2.1 percent to a low of $1,336 but was last at $1,339.25 from $1,364. The metal used in transport and packaging has come under pressure in recent weeks on news of falling car sales data from auto makers. Japanese shipments of aluminium products fell to a 26-year low in January and posted the largest drop in 28 years, hit by weak demand as the global economy deteriorated, industry data showed. LME aluminium stocks jumped 7,500 tonnes to 3.2 million tonnes, a reminder of weaker demand for the metal. "We are still fairly negative on most base metals," said Richard Knights, an analyst at Numis Securities. "If you continue to see global industrial production -- in previously quickly developing economies like China -- decreasing at the rate it has been, it's inevitable that base metals will continue to be oversupplied and prices will come down." Nickel was at $9,850 from $10,100 at the close on Thursday, lead at $1,023 from $1,044 and zinc at $1,120 from $1,138. Elsewhere, European zinc producers are set to cut output further to cope with the supply glut and low prices, according to world No. 2 miner OZ Minerals.Tin drifted $150 lower to $10,800. Looking ahead, the U.S. Commerce Department releases its preliminary estimate of fourth quarter Gross Domestic Product growth at 1330 GMT, with February consumer sentiment data due at 1445 GMT. Metal Prices at 0946 GMT Metal Last Change Percent Move End 2007 Ytd Percent

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