NEW YORK/LONDON, Dec 16 (Reuters) - Copper ended down for a third straight day on Thursday as monetary tightening jitters in top-consumer China and persistent worries about Europe's debt crisis led investors to seek safety in the U.S. dollar.
A sudden build in London Metal Exchange-monitored copper warehouse stocks only added to the market's waning risk appetite, prompting some players to cash in on some heady gains this year, analysts said.
"After a protracted period of declines, LME inventories have increased 12,175 tonnes this week. You take that and the fact that the dollar is doing what it's been doing against the other currencies over the last few days, throw in some profit-taking and there's your short-term view," said John Gross, publisher of the Copper Journal.
LME benchmark copper CMCU3 ended down $104 at $8,991 a tonne after hitting a near-one-week low of $8,930 a tonne earlier in the day.
COMEX copper for March delivery HGH1 shed 1.65 cents to settle at $4.1160 per lb, after dealing from $4.0780 to $4.1385.
On Tuesday, prices of the metal hit record highs at $9,267.50 a tonne in London and $4.2290 per lb in New York -- gains of more than 50 percent since early June.
"We've seen a general retreat in risk appetite across the board today," said analyst Dan Smith of Standard Chartered.
Sovereign debt issues were once again front and center for the markets as EU leaders meet in Brussels on Thursday and Friday to try to agree on further action to tackle a year-long debt crisis that has consumed Greece and Ireland.
Aside from Europe's issues, another positive stream of data from the United States led to a strong recovery in the U.S. dollar.
Short-term demand concerns have also begun to creep up in China, after a sharp jump in consumer price inflation this past weekend reinforced views of further belt tightening measures from the Asian giant.
"China is obviously the other wild card. As more of this data comes out positive, it continues to show that their economy is continuing to heat up. At some point they are going to have to take further action. Raising the reserve requirements just isn't going to do it," said Matthew Zeman, head of trading with LaSalle Futures Group in Chicago.
Copper sentiment took a hit from inventory data showing stocks climbed 2,850 tonnes to 360,800 tonnes, bucking a bullish trend in place since mid-February.
Lead LME inventories climbed 725 tonnes and are now at their highest level since May 2000 at 207,775 tonnes, while zinc stocks fell but remain near six-year highs at 699,175 tonnes.
Falling ore grades, disruptions and project delays, and the launch of exchange traded products mean copper supply could, possibly starting this year, fall short of demand estimated at about 19 million tonnes, analysts say.
The amount of copper held to back a physical copper exchange traded product PHCU.L jumped by some 570 tonnes to 595.2 tonnes as of Dec. 16, from Dec. 14.
Concerns about nearby supplies are still bubbling near the surface. That can be seen in the premium for cash material over the three-month contract MCU0-3 -- at $42 a tonne from a discount of $37.50 a tonne at the end of March.
Focus also remains on LME cash contracts and warrants holdings for copper where data on Thursday showed a dominant position holding between 80-90 percent fell back to between 40 to 5 percent.
More broadly, U.S. regulators unveiled their new plan for commodities regulation on Thursday.
Among other metals, aluminum CMAL3 finished at $2,318/2,319 a tonne from a prior close at $2,321, nickel CMNI3 rose $200 to end at $24,700 and lead CMPB3 fell $55 to $2,370
Zinc CMZN3 slipped $38 to finish at $2,220 a tonne and tin CMSN3 rose $275 to $26,100.
Metal Prices at 1949 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct
COMEX Cu 410.25 -3.00 -0.73 334.65 22.59
LME Alum 2318.00 -3.00 -0.13 2230.00 3.95
LME Cu 8991.00 -104.00 -1.14 7375.00 21.91
LME Lead 2365.00 -60.00 -2.47 2432.00 -2.75
LME Nickel 24700.00 200.00 +0.82 18525.00 33.33
LME Tin 26100.00 275.00 +1.06 16950.00 53.98
LME Zinc 2220.00 -38.00 -1.68 2560.00 -13.28
SHFE Alu 16540.00 0.00 +0.00 17160.00 -3.61
SHFE Cu* 67170.00 -710.00 -1.05 59900.00 12.14
SHFE Zin 18515.00 45.00 +0.24 21195.00 -12.64