* Shanghai lags behind in metals bull run on demand worry * Upbeat economic data likely to keep metals strong (Updates prices) SHANGHAI, June 12 - London copper fell more than 2 percent on Friday, retreating from gains in the previous session, while Shanghai lagged behind the rally on worries over sluggish demand in summer. Metals market, together with other markets, have been encouraged by upbeat news from around the world pointing to an economy recovery, including the first gain in three months in U.S. retail sales and a drop in new jobless claims. Another bright spot was China's annual industrial growth, which rebounded to 8.9 percent in May against forecasts of 7.5 percent, while May retail sales were up 15.2 percent from last year, exceeding expectations of a 14.9 percent rise. London copper hit a near eight-month high of $5,388 a tonne in the previous session, bolstered by China's record copper imports in May, but this provided little support to sentiment in the Shanghai market, where worries over weak demand in summer linger. Shanghai's benchmark third-month copper contract settled down 0.8 percent to 41,180 yuan a tonne, shedding earlier gains as sentiment dampened by falls in domestic stock markets. It finished 0.2 percent higher than a week earlier. The most-active contract for September delivery edged down 0.5 percent to 41,350 yuan at close. "Shanghai copper has not followed LME's enthusiasm, because domestic consumption is not good. If Shanghai stays below 42,000 yuan, the bull run may slow down or take a pause next week," said a Shanghai-based trader. "Consumption in other countries has yet to recover as the financial crisis is not going to end this soon. So long as consumption stays weak, sharp rises in prices are meaningless." Copper for three-month contract on the London Metal Exchange fell 2.1 percent, or $115, to $5,265 a tonne by 0701 GMT, easing from gains the previous day, but was headed to a weekly rise of 6 percent. Copper inventories in LME warehouses drifted lower to 293,175 tonnes on Thursday, helping sentiment. But cancelled warrants -- material tagged for delivery -- fell as well, to 27,625 tonnes, or about 9.4 percent of total stocks. "The dollar is in a downward channel, providing support to commodities. Copper may still rise next week, but likely in a more cautious manner, as there is really no signs of consumption recovery," said Wang Zhouyi, an analyst at Shanghai CIFCO Futures. The Shanghai Futures Exchange is due to release its weekly metals stocks data later in the day. Investors expect stockpiles to continue to rise but not necessarily as strongly as last week when copper stocks rose 51 percent. LME aluminium shed 1.7 percent to $1,665 a tonne, after failing to reach a six-month high of $1,701 hit on Wednesday. Shanghai aluminium ended flat at 13,470 yuan. "Domestic aluminium prices are facing a lot of pressure. As a large producer of aluminium, China imported so much of it in the past few months as a result of higher domestic prices," said Li Rong, an analyst with Great Wall Futures. China's May primary aluminium output rose 14 percent due to smelters' restarting of idled and new capacity, casting shadow on outlook of aluminium prices. Base metals prices at 0701 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 5265.00 -115.00 -2.14 3060.00 72.06 SHFE Cu* 41180.00 -310.00 -0.75 23840.00 72.73 LME Alum 1665.00 -28.00 -1.65 1535.00 8.47 SHFE Alum* 13470.00 0.00 +0.00 11540.00 16.72 COMEX Cu** 240.00 -3.80 -1.56 139.50 72.04 LME Zinc 1680.00 -40.00 -2.33 1208.00 39.07 SHFE Zinc 13730.00 110.00 +0.81 10120.00 35.67 LME Nickel 15525.00 -275.00 -1.74 11700.00 32.69 LME Lead 1785.00 -34.00 -1.87 999.00 78.68 LME Tin 15825.00 75.00 +0.48 10700.00 47.90 LME/Shanghai arb^ 915 Dollar/yuan 6.8336 \ 6.8339 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

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