Copper below $10,000; risk-averse on inflation, data fears

* Chinese inflation points to further tightening measures

 * Citi sees $10,000 a tonne copper sustained near term

 * LME copper stocks rise to six-month peaks at 402,425 T

 * Coming up: US housing, industrial output data Wednesday

 (Recasts, adds NEW YORK dateline/byline, updates with New York
closing copper price, adds analyst comments)

 By Chris Kelly and Melanie Burton

 NEW YORK/LONDON, Feb 15 (Reuters) - Copper unraveled from a
new record high on Tuesday, posting its biggest one-day slide in
three weeks, as rising inflation in top consumer China dented the
shorter-term demand view and raised the specter of more monetary
tightening.

 One day removed from a bullish 5.7 percent rise in Chinese
copper imports, questions about the metal-consuming giant's
ability to sustain its rapid rate of growth resurfaced.
[ID:nTOE71D037]

 Questions arose after data showed Chinese inflation hit a
lower-than-forecast 4.9 percent in January, while price pressures
excluding food jumped to their strongest in at least a decade,
suggesting Beijing will maintain its monetary tightening campaign
this year.

 "With stronger growth, you're also getting inflation," said
Peter Buchanan, commodities analyst and senior economist at CIBC
in Toronto.

 "The import data did suggest their economy still has a good
deal of momentum ... (but) their growth is unsustainable, so they
are going to have to take further action to cool it."

 London Metal Exchange (LME) copper for three-month delivery
CMCU3 snapped back from a record $10,190 a tonne to end down
$149, or nearly 1.5 percent, at $10,011.

 COMEX copper for March delivery HGH1 moved in similar
fashion, rallying to a fresh all-time high at $4.6495 per lb
before shedding 9.25 cents or 2 percent to finish at $4.5360.

 CHINA TIGHTENING TO HIT COPPER DEMAND

 China is the world's largest consumer of copper, accounting
for about 25 percent of global demand.

 CIBC's Buchanan believed further rounds of belt-tightening
measures by Beijing could come seen sooner, rather than later, as
2012 is a political transition year. As a result, copper demand
should take a hit.

 "It is going to affect it in the short term, especially if it
slows their construction sector," he said.

 Copper has climbed by two-thirds since June 2010 when worries
about sovereign default in the euro zone sparked severe selling of
investments seen as risky.

 Since then it has been pushed ahead by a rebound in the West
and still robust, if slowing, growth in emerging nations, which
have outpaced growth in supply.

 U.S. economic data backed the Western rebound view.

 U.S. retail sales rose 0.3 percent in January for a seventh
straight month of advances and regional manufacturing activity
climbed to an eight-month high in February. [ID:nN15164973]

 "Copper has been choppy today but it is a good story still and
can push higher. Underlying fundamentals are very supportive but
not super bullish. That's the reason for the indecision by
traders," Standard Chartered analyst Daniel Smith said.

 SUSTAINABLE $10,000 COPPER?

 Despite steadily growing global copper inventories, the risk
of substitution and correction potential in the very near term,
copper prices will likely stay elevated over the coming months,
said Citi in a note.

 "We suspect that copper can sustain the $10,000 mark in Q2-Q3,
as the market pushes into a large supply deficit," the note said.

 Citi expects a deficit of 500,000 tonnes in 2011 and a small
deficit in 2012. Aluminium is expected to be a key beneficiary of
copper substitution, for example, in heat exchange applications
such as air conditioning.

 "When benchmarks like the $10,000/tonne mark are hit,
consumers look carefully at substitutes and/or efforts to
economise. The market is likely to lose more than 500,000 (tonnes)
of consumption as a result of high prices this year," Citi's note
said.

 Meanwhile, copper stocks continued their uptrend, rising 650
tonnes to 402,425 tonnes Tuesday, to stand at their highest level
since August 2010. MCU-STOCKS

 Aluminium inventories were also up. Stockpiles are now some
40,000 tonnes short of record highs. MAL-STOCKS

 Aluminium CMAL3 fell $12 to end at $2,502 a tonne.

 Tin CMSN3 hit a fresh all-time peak of $32,799. It has
advanced 22 percent this year on the back of supply constraints
from top exporter Indonesia. [ID:nLDE71E0OO]
 Metal Prices at 1909 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       453.55       -9.30     -2.01     444.70      1.99
 LME Alum      2504.00      -10.00     -0.40    2470.00      1.38
 LME Cu       10011.00     -149.00     -1.47    9600.00      4.28
 LME Lead      2630.00      -10.00     -0.38    2550.00      3.14
 LME Nickel   28740.00     -155.00     -0.54   24750.00     16.12
 LME Tin      32500.00       50.00     +0.15   26900.00     20.82
 LME Zinc      2490.00      -31.00     -1.23    2454.00      1.47
 SHFE Alu     17190.00      -80.00     -0.46   16840.00      2.08
 SHFE Cu*     76100.00     -170.00     -0.22   71850.00      5.92
 SHFE Zin     19620.00      -55.00     -0.28   19475.00      0.74
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Silvia Antonioli in London; Editing by
Lisa Shumaker)

(Source: http://af.reuters.com/article/metalsNews/idAFLDE71E21N20110215)