METALS-Copper stumbles over Chinese growth data

* Copper stock draw to support sentiment

* Copper canceled warrants rise

* Lead moves from contango to backwardation (Adds NEW YORK to dateline, recasts, updates with New York closing copper prices, adds broker comments)

By Chris Kelly and Pratima Desai

NEW YORK/LONDON, April 16 (Reuters) - Slower-than-expected economic growth in China and a sharp deterioration in new home construction in the United States pulled the price of copper down on Thursday, but falling inventories slowed the rate of decline.

Copper for three months delivery MCU3 on the London Metal Exchange closed at $4,729 a tonne, down $90 from Wednesday's close.

China's economy grew at its slowest pace on record in the first quarter -- 6.1 percent compared with forecasts of 6.3 percent and averages around 10 percent in previous years -- prompting investors to take profits. [ID:nPEK237287]

For a graphic, click on: here)

"China's buying in metals is not directly related to domestic consumption," said Mo Ahmadzadeh, president of Mitsui Bussan Commodities. "The reaction to the GDP is correct because the longer-term prognosis is not beneficial for metals."

The metal, used in power and construction, lost further ground after the U.S. Commerce Department said groundbreaking on new homes dropped 10.8 percent to a seasonally adjusted annual rate of 510,000 units.

The figure was the second lowest on records dating back to 1959, and was down from February's downwardly revised 572,000 units.

Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, California did see a glimmer of hope in the dismal housing data.

"A lot of people have thought the housing market needed to get down below a half million seasonally adjusted starts before seeing a bottom and now that we're finally getting there maybe there's a little bit more light at the end of the tunnel," he said.

Copper prices rallied to six-month highs of $4,925 a tonne in London and $2.2350 a lb in New York this week due in part to Chinese purchases and anticipation of an improvement in demand.

That expectation is still driving the market, said Michael Widmer, an analyst at BNP Paribas.

"The bets are on China's stimulus package," he said. "But I don't think all the inventory drawdown is going into underlying demand, some of it is going into stockpiles ... outside of China demand continues to be weak," Widmer said.

Stocks of copper in LME warehouses fell 5,200 tonnes to 475,200, down about 10 percent since the middle of February.

PRODUCTION RAMP

Canceled warrants -- stock already tagged for delivery -- rose to 66,275 tonnes on Wednesday from 57,525 the previous day.

Analysts say this material is probably heading for China given the price premium of about $150 to $200 a tonne for copper in China over London Metal Exchange prices.

"Stocks have been falling, predominantly in Asian warehouses and in Singapore in particular, fueling speculation of ongoing reserve purchases in China," Commerzbank said in a note.

In other metals, aluminum MAL3 was last quoted at $1,482 a tonne from $1,515 at the close on Wednesday. Steel-making ingredient nickel MNI3 rose to $12,720 a tonne, its highest since Jan. 7 and closed at $12,450, down from $12,500.

Zinc MZN3 closed at $1,495 a tonne from $1,520. Earlier it touched $1,548, the highest since early October, while tin and lead hit $11,800 and $1,570 respectively, their highest levels since January and late October.

Dominant positions controlling more than 90 percent of cash warrants on LME stocks has bolstered tin and lead prices.

Supply worries for both metals are reflected in the premium for cash material over the three-month contract, which for tin is around $110 a tonne. That is below levels above $200 seen last week, but it is above the $32.5 seen in early February.

The premium for lead is small at about $3, but it compares with a discount of about $16 in late March.

Tin MSN3 was at $11,550/11,600 a tonne from $11,350 on Wednesday and lead MPB3 at $1,504 from $1,545. (Additional reporting by Humeyra Pamuk in London; Editing by Christian Wiessner)