METALS-Copper eases; investors wary on demand despite data

* China data, U.S. company updates buoy sentiment

* Copper inventories at lows last seen Nov 2008

* Copper, tin in backwardation (Recasts, updates with New York closing copper prices, adds analyst comments and NEW YORK to dateline)

By Chris Kelly and Rebekah Curtis

NEW YORK/LONDON, July 16 (Reuters) - Copper ended down on Thursday, giving back a fraction of the week's strong gains even though upbeat corporate earnings in the United states and robust growth data from China gave fresh signs the world economy may have passed the worst.

Copper for September delivery HGU9 on the New York Mercantile Exchange's COMEX division eased 0.25 cent to close at $2.3895 a lb, after dealing between $2.3570 and $2.41, its highest level since June 12.

On the London Metal Exchange (LME), copper for three month delivery MCU3 shed $3 to settle at $5,260 a tonne.

Analysts warn the outlook remains shaky, but voice growing confidence that the global slowdown is nonetheless easing.

"We're getting more and more economic data that suggests we have passed the worst and that we are pulling out of this slump," said David Thurtell at Citi, adding that Thursday's decline was a small adjustment after hefty recent gains.

Copper, used in power and construction, is up 7.6 percent so far this week after upbeat U.S. economic and corporate data, and hit a one-month high of $5,284 on Wednesday.

"The market's are taking a breather today," said Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, California.

"The story out of China is certainly one to note as it could be the first of the major economies to be pulling out of the recession," he added.

China's growth sped up to hit 7.9 percent in the second quarter, fueled by state spending and bank lending, reinforcing hopes it will lead the world economy out of its deepest recession in 80 years. [ID:nSP537798]

Copper briefly turned positive after other data showed the number of U.S. workers filing new claims for jobless benefits fell sharply last week. [ID:nN16256518]

But the metal came under pressure again as the dollar gained after data showed factory activity in the U.S. Mid-Atlantic region contracted for the 10th consecutive month in July. [ID:nN16409902]

Investors have been viewing the dollar as a hedge against risk, and a stronger U.S. currency makes dollar-priced metals more expensive for holders of other currencies.

MARKET TIGHTNESS ?

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 $8/$9 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 favorable supply and demand fundamentals, will benefit copper ahead of most other LME metals, Investec Asset Management said. [ID:nLF335603]

"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.

Aluminum MAL3 was untraded at the close but was last bid at $1,690 from $1,655. The demand outlook for the metal used in transport and packaging remains a concern, with stocks at record levels over 4.5 million tonnes. It hit a day's high of $1,685, its highest since June 26.

Steel-making ingredient nickel MNI3 closed at $16,100 from $15,940 while battery material lead MPB3 closed at $1,620 versus $1,635.

Zinc MZN3 was untraded at the close but was last bid at $1,549 from $1,542, and tin MSN3, which was also untraded at the close, was last bid at $13,025 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 1857 GMT Metal Last Change Pct Move End 2008 Ytd Pct

move COMEX Cu 237.85 -0.40 -0.17 139.50 70.50 LME Alum 1690.00 35.00 +2.11 1535.00 10.10 LME Cu 5240.00 -23.00 -0.44 3060.00 71.24 LME Lead 1615.00 -20.00 -1.22 999.00 61.66 LME Nickel 16010.00 70.00 +0.44 11700.00 36.84 LME Tin 12930.00 630.00 +5.12 10700.00 20.84 LME Zinc 1550.00 8.00 +0.52 1208.00 28.31 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 (Additional reporting by Michael Taylor and Kylie MacLellan; Editing by Christian Wiessner)