Jul 05, 2012 (Dow Jones) NEW YORK--Copper had climbed earlier this week to its highest price since mid-May on expectations of central banks taking action to support the global economy, but the industrial metal retreated Thursday when some stimulus was announced.

China's surprise interest-rate cut, in particular, raised red flags that prospects for economic growth may be worse than expected for the world's No. 1 copper consumer

Copper for July delivery fell 4.65 cents, or 1.3%, to settle at $3.488 a pound on the Comex division of the New York Mercantile Exchange.

The most actively traded contract, for September delivery, fell 4.70 cents, or 1.3%, to settle at $3.493 a pound.

China's central bank Thursday announced its second interest-rate cut this month, a move that analysts say signals Beijing's concern for the health of the country's economy. Many investors had been expecting the People's Bank of China to cut the amount of money banks must deposit with the central bank, effectively freeing funds for more loans. However, the PBOC surprised with the more forceful interest-rate cut.

"Although rate cuts are a positive form of stimulus, the fact they were required indicates that growth is slowing in China," said Jason Schenker, president of Prestige Economics, in a note.

China accounts for roughly 40% of consumption of the industrial metal.

The European Central Bank and Bank of England also took steps to boost those economies on Thursday. The ECB cut interest rates, which bank President Mario Draghi acknowledged was in response to a slowdown in the euro-zone economy. The BOE said it would buy GBP50 billion ($78 billion) in assets, essentially printing money, aimed at boosting spending and keeping borrowing costs low.

But traders had likely accounted for those moves earlier in the week, said Frank McGhee, head dealer at Integrated Brokerage Services. "The market was not expecting the Chinese move, which is certainly indicating a more grim picture than what we had before, especially on the industrial side of things."

Copper tends to react to shifts in the economic growth outlook because of its widespread uses across industries, including consumer electronics, power cables, plumbing and automobiles.

The central bank moves on Thursday sent investors into U.S. dollar-denominated assets, pushing the currency higher and weighing on dollar-denominated commodities by making the futures appear more expensive for buyers using other currencies. The ICE U.S. Dollar Index, which tracks the currency against those of some major U.S. trading partners, hit the highest point since June 4.

Comex floor trading was closed on Wednesday for the U.S. Independence Day holiday.

Copper settlements (ranges include electronic and pit trading):
Jul $3.4880; down 4.65 cents; Range $3.4680-$3.5330
Sep $3.4930; down 4.70 cents; Range $3.4695-$3.5400