* China factories off to sluggish 2012 start * Investors close positions ahead of Chinese New Year * Copper stocks in LME-monitored warehouses fall By Susan Thomas and Melanie Burton LONDON/SHANGHAI, Jan 20 (Reuters) - Copper fell on Friday, but stayed near a four-month high, after manufacturing data from big metals consumer China showing a lacklustre start to the year offset near-term expectations of demand from the world's top consumer of the metal. Three-month copper on the London Metal Exchange (LME) was $8,287.75 per tonne at 1035 GMT, down 0.9 percent from a last-bid $8,360 on Thursday. Earlier, it hit $8,428.50, its highest since Sept. 20. Prices are up around 3.5 percent this week, a second week of gains. China's manufacturers started 2012 in a sluggish mode, suggesting Beijing will keep pulling pro-growth policy levers despite some early signs that a downward drift in factory activity is slowing, a survey of purchasing managers showed on Friday. "That's playing its part this morning, these are markets that will remain sensitive to economic data and political headlines," Barclays Capital analyst Gayle Berry said. "For copper, the slowdown in demand is not as bad as expected, but these are still macro-dominated markets, vulnerable to any negative headlines." Berry said there could be some selling pressure on Friday, as investors close positions ahead of the week-long Chinese New Year next week. INVENTORIES FALL Supply constraints and dwindling inventories of copper also helped underpin the price of the metal. Copper inventories monitored by the LME fell to their lowest since October 2009, data showed on Friday. "There is no doubt a problem with copper supply. You've had results from the major corporates this week showing continued problems into Q4. So this year we're going to see modest demand growth against a backdrop of pretty poor supply growth," analyst Dan Smith of Standard Chartered said. Global diversified miners Rio Tinto and BHP Billiton both reported lower copper production in the fourth quarter. Aurubis, Europe's largest copper producer, expects "robust" results this year, with strong demand from China, which accounts for 40 percent of global consumption of the metal. "Market sentiment is clearly positive and the sector benefits more than other markets from the improvement in funding conditions due to its capital intensity," Credit Suisse said in a research note. "However, we would warn that there are still some risks in the near-term. Inventories in China are rising, which hints at moderating demand, at least temporarily." In China, inventories in warehouses monitored by the Shanghai Futures Exchange rose 9.3 percent from last Friday, the exchange said. A firm dollar, which makes dollar-priced commodities more expensive for holders of other currencies, also put pressure on metals. But a positive week of news around Europe's debt crisis and signs the U.S. economy is recovering has underpinned overall sentiment in financial markets. Tin was down 1.2 percent at $21,600 from $21,900 while zinc was at $2,012 from $2,030. Lead was $2,166 from $2,183 and aluminium was at $2,213.25 from $2,232. Nickel was $20,195 from $20,200 . Metal Prices at 1024 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct move COMEX Cu 377.40 -2.40 -0.63 444.70 -15.13 LME Alum 2210.25 -21.75 -0.97 2470.00 -10.52 LME Cu 8275.25 40.25 +0.49 9600.00 -13.80 LME Lead 2159.00 -24.00 -1.10 2550.00 -15.33 LME Nickel 20192.00 -8.00 -0.04 24750.00 -18.42 LME Tin 21600.00 -300.00 -1.37 26900.00 -19.70 LME Zinc 2012.75 -17.25 -0.85 2454.00 -17.98 SHFE Alu 16395.00 30.00 +0.18 16840.00 -2.64 SHFE Cu* 60720.00 160.00 +0.26 71850.00 -15.49 SHFE Zin 15855.00 195.00 +1.25 19475.00 -18.59 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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