NEW YORK, Feb 15, 2011 (Dow Jones Commodities News via Comtex) -- Copper futures fell Tuesday as participants cashed in on record high prices.

The most actively traded copper contract, for March delivery, declined 9.25 cents, or 2%, to settle at $4.5360 a pound on the Comex division of the New York Mercantile Exchange.

"You've reached a new plateau, so the market pulls back," said Ira Epstein, director of the Ira Epstein division of the Linn Group. "It's ripe for profit-taking."

Overnight, Comex copper hit an intraday record $4.6495 and benchmark London Metal Exchange copper reached $10,190 a metric ton as lower-than-expected Chinese inflation data eased some immediate worries that China will try to further cool its economy by tightening monetary policy.

But that optimism faded quickly.

"Although the (Chinese) CPI number came in somewhat lower than expected, we doubt this will change the rate-rising stance the authorities will seek to maintain, as there are few signs that the inflation picture will actually moderate going forward," MF Global analyst Edward Meir said in a note to clients.

China is the world's largest copper consumer, and market participants have been fretting that higher inflation will lead the Asian nation to tighten policy enough to crimp some of that copper demand.

Copper also came under pressure after rising U.K. inflation data prompted more hand-wringing over monetary tightening measures. Further losses followed data showing U.S. retail and food-services sales rose only 0.3% in January when economists had been expecting a 0.6% increase. That was enough to keep copper--an industrial metal widely used in manufacturing--lower despite separate data showing New York manufacturing activity continued to expand in February.

Despite Tuesday's decline, participants remain positive on copper. Expectations of strong demand from China, as well as recovering developed nations, and a shortage of supply have prompted analysts to forecast a supply shortfall of between 90,000 and 825,000 tons this year.

"The market is in a good solid uptrend," said Bill O'Neill, a principal with LOGIC Advisors. "The overall pattern is going to continue higher."

With copper near historic highs, the Singapore Exchange (S68.SG) Tuesday launched base-metals futures in conjunction with the London Metal Exchange, seeking to capture a bigger share of the growing regional commodities market.

Meanwhile, inventories of copper stored in London Metal Exchange warehouses rose 650 metric tons Tuesday, leaving them at 402,425 metric tons. The most recent Comex inventory data, released late Monday afternoon, were up 399 short tons at 77,108 short tons.

Copper settlements (ranges include electronic and pit trading):

Mar $4.5360; down 9.25 cents; Range $4.5265-$4.6495
May $4.5460; down 9.15 cents; Range $4.5370-$4.6575