NEW YORK/LONDON, March 10 (Reuters) - Copper prices retreated on Wednesday after lingering worries over global economic health nudged the industrial metal into negative territory, analysts said.
But data showing strong Chinese imports of the industrial metal boosted confidence in the demand outlook from the world's top consumer, effectively paring market losses.
Benchmark copper CMCU3 on the London Metal Exchange closed at $7,437 per tonne, away from the day's low at $7,385 and compared to Tuesday's close at $7,510.
The key May copper contract HGK0 dropped 4.35 cents to settle at $3.368 per lb on the New York Mercantile Exchange's COMEX division.
Bucking early weakness, market focus quickly turned to China's imports of unwrought copper, which outpaced forecasts by rising 10.3 percent to 322,282 tonnes.
"The fact that imports were up month-on-month does suggest growth is continuing to be good, drawing in more raw material," said Robin Bhar, analyst at Credit Agricole.
"In both aluminium and copper, scrap tightness does seem to be playing a part ... The indications are positive we are now in the seasonally strong period of March to May."
Imports of copper scrap fell 17 percent from January, which analysts attributed to a lack of scrap availability.
The data reassured investors who feared China's buying is waning this year, compared with 2009 when Chinese demand helped the metal used in power and construction soar 140 percent.
"Copper imports are indicative of robust demand growth in China," said Daniel Smith, an analyst at Standard Chartered.
"Chinese imports of base metals will remain much higher than historical levels. They're going to surprise on the upside through the year."
A trend of falling LME inventories remained a key factor supporting copper futures, with stocks down 700 tonnes on Tuesday at 538,175 tonnes.
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Investors continued to worry about debt problems in euro zone countries such as Portugal and Greece.
"Worries about sovereign debts in Europe have weighed on both the euro and investor sentiment, while concerns have also focused on China as Beijing has announced a series of monetary tightening measures," Standard Bank said in a note.
"However, after a period of risk aversion in late January and early February, risk appetite seems to be returning."
Aluminium CMAL3 closed at $2,225 from Tuesday's $2,258. LME stocks of the metal, used in transport and packaging, fell 5,150 tonnes to some 4.5 million tonnes, their lowest level since July.
Earlier this year stocks hit a record above 4.6 million tonnes. A large portion is tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.
Commodity trader Glencore [GLEN.UL], which has a 35 percent stake in mining group Xstrata (XTA.L), warned of a bumpy recovery after posting a 43 percent fall in 2009 net profit on weak prices hit by the downturn.