UPDATE 2-Peabody Energy sees slowing China coal demand

* Peabody sees slowing coal demand from China

* Not ready to declare victory on global recovery

* Continues to seek investment opportunities (Adds company, analyst comments, stock down in New York)

By James Grubel

CANBERRA, Aug 12 (Reuters) - U.S. coal miner Peabody EnergyCorp (BTU.N) sees slowing Chinese demand for thermal and metallurgical coal after a strong first six months of the year, Chief Executive Greg Boyce said on Wednesday.

Boyce said China had built up stockpiles of steel and other products and he was sceptical the country would maintain the pace of its metallurgical and thermal coal imports in the second half of the year.

"We're seeing signs of both of those slowing down right now as China has kind of gone through their first stimulus and their export economy has not recovered," Boyce told reporters during a visit to Australia.

Last month, St Louis-based Peabody said China would continue to be a big buyer of metallurgical, or coking coal, due to growing steel production.

A company spokesman noted on Wednesday that China imported 15 million tons of met coal from January to May, but a whopping 22 million tons in June alone.

"We see the pace continuing this year at a sustainable level consistent with the first five months of the year. June was an anomaly," spokesman Vic Svec told Reuters.

Peabody stock fell 1.6 percent to $34.50 at midday on the New York Stock Exchange.

Analyst William Burns, or Johnson Rice & Co, said the market was not only reacting to Boyce's comments about China, but also to proposed Australian environmental legislation that could hurt the mining industry.

"This is such a fluid market," Burns said of the met coal business. "Two months ago, China saw it was cheaper to buy on the spot market.

"They did it aggressively and it brought balance to the market and then they backed off. It was gamesmanship."

He said short-term needs would be met by Chinese domestic miners, but that, in the longer term, Chinese demand would keep increasing.

While trade sources and analysts agree Chinese demand for thermal coal for power generation would slow from the record levels of the second quarter, most say its appetite for metallurgical or coking coal has not yet waned.

China's crude steel output reached a record 50.68 million tonnes in July, the fastest year-on-year growth rate since 2007, according to figures released by the National Bureau of Statistics on Tuesday. [ID:nPEK252686]

Second quarter results at Peabody, the world's largest private coal company, were hit by a sharp drop in global steel production, which forced it to cut metallurgical coal output.

Boyce, in Canberra for meetings with the Australian government over its carbon emissions plans, said demand in Europe remained very flat, with high coal stockpiles.

Peabody's main electricity customers in the United States were also expecting lower demand, despite some positive economic signs.

Boyce also said Peabody continued to look for investment opportunities, including in Indonesia, but he would not comment on whether the company had bid for a stake in Indonesian coal miner PT Berau Coal. [ID:nHKG201609]

Berau, Indonesia's fifth-largest coal miner, has generated strong interest as it is rare for controlling stakes in Indonesian energy firms to be put on the market. The stake offers a steady supply of quality Indonesian thermal coal.

"I'll just say we continue to look for opportunities, whether it is the recent joint venture we did in Mongolia, whether it is the things we are doing in China," he said.

"We continue to look in all the coal producing regions. Indonesia is one of them." (Additional reporting by Tom Miles in Shanghai and Steve James in New York; editing by Jonathan Standing and Andre Grenon)