* China data buoys sentiment but dollar strength weighs * Copper inventories at lows last seen Nov 2008 * Copper, tin in backwardation (Updates prices, adds detail) By Michael Taylor LONDON, July 16 (Reuters) - Copper edged lower on Thursday as the dollar strengthened and investors remained cautious on demand prospects, despite strong U.S. earnings and robust growth data from China. By 1018 GMT, copper for three month delivery MCU3 on the London Metal Exchange fell to $5,195 a tonne from $5,263 at the close on Wednesday and compared with a session low at $5,163. The red metal, used in power and construction, rose to a one-month high of $5,284 a tonne on Wednesday as solid corporate earnings in the U.S. gave investors hope that the worst of the economic downturn may be over. "FX movements could explain the bit of weakness," said Gayle Berry, an analyst at Barclays Capital. "Prices have risen quite strongly over the past few days ... although the Chinese numbers were stronger than expected, I'm not sure they were strong enough." Robust growth data from China, the world's largest copper consumer, capped greater losses after it accelerated to 7.9 percent in April-June from 6.1 percent in the first quarter. [ID:nBJC000381] [ID:nSP537580] "As the economic recovery gathers speed in emerging markets, the demand for base metals will likely continue to improve even if the recovery stalls in the developed markets, given the leverage copper demand has to China and the emerging markets," said Goldman Sachs in a note. The U.S. currency rose, making metals priced in dollars more expensive for holders of other currencies. [USD/] While on the macro calendar, weekly U.S. jobless claims data at 1230 GMT will be eyed for further economic indicators. Investors were concerned over tightness in the copper market as data showed a dominant position controlling between 50 percent and 80 percent of LME stocks. [LME/WC] Analysts said this was partly behind copper moving into backwardation -- a premium of about $11 for LME cash copper over the three-month contract. This compares to a contango of $14.50 on July 8. LME copper inventories shed 225 tonnes to 260,875 tonnes. These low stock levels, combined with favourable supply and demand fundamentals, will benefit copper ahead of most other LME metals, Investec Asset Management said. [ID:nLF335603] ALUMINIUM Aluminium rose $16 to $1,671. The metal, used in transport and packaging, has been boosted by Chinese stockpiling efforts in recent weeks but analysts say this is now starting to fade as the summer lull approaches. "(Sentiment) seems positive at the minute," said Michael Khosrowpour, an analyst at Triland Metals on industrial metals. "I'm neutral to slightly bearish over this quarter and bullish for the last quarter ... I would be surprised if we saw some major rallies in July/August." Highlighting concerns over weak fundamentals, LME aluminium stocks remain at record levels above 4.5 million tonnes. In other metals, steel-making ingredient nickel MNI3 traded at $15,835 from $15,940 while battery material lead MPB3 was at $1,590.25 from $1,635. Zinc MZN3 shed $14 to $1,528 a tonne and tin MSN3 edged down to $13,100 from $13,300. Worries about nearby supplies of tin have pushed the premium for cash material over the three-month contract to around $180 a tonne from a discount of around $40 a tonne mid-June. MSN0-3 Traders also remain concerned about the scale of long positions in the tin market, compared with the amount of available metal in LME warehouses. [ID:nL6246168] For latest Reuters polls of industrial metals price forecasts, click on [MET/POLL] or COMMODITYPOLL01 Metal Prices at 1021 GMT Metal Last Change Pct Move End 2008 Ytd Pct move COMEX Cu 236.65 -1.60 -0.67 139.50 69.64 LME Alum 1666.00 11.00 +0.66 1535.00 8.53 LME Cu 5198.00 -65.00 -1.24 3060.00 69.87 LME Lead 1603.00 -32.00 -1.96 999.00 60.46 LME Nickel 15750.00 -190.00 -1.19 11700.00 34.62 LME Tin 12950.00 650.00 +5.28 10700.00 21.03 LME Zinc 1520.00 -22.00 -1.43 1208.00 25.83 SHFE Alu 13515.00 25.00 +0.19 11540.00 17.11 SHFE Cu* 41540.00 200.00 +0.48 23840.00 74.24 SHFE Zin 13240.00 -10.00 -0.08 10120.00 30.83 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by Michael Taylor; editing by Peter Blackburn)

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