LONDON, Jan 31 (Reuters) - Copper dipped on Thursday, retreating from a 3-1/2 month peak as investors grew wary about the lack of underlying metals demand amid economic recovery in top metals consumer China and in the United States.
Three-month copper on the London Metal Exchange closed 0.7 percent weaker at $8,165 a tonne after three days of gains and after touching an intraday peak of $8,291.25, its highest since early October.
"It was too much too soon. CTA buying pushed it all higher yesterday and this morning, but after lunch the buying dried up and there was no one left to support prices here," said a London metals trader.
Commodity Trader Advisers (CTAs) or managed future funds seek opportunities as momentum and trends develop, but can quickly reverse their positions.
Investors will now be closely eyeing China's purchasing manufacturing figures and the U.S. January jobs report, both due on Friday.
"We could see a mild retracement setting in over the balance of the week, particularly if tomorrow's nonfarm payroll number disappoints," said analyst Edward Meir at INTL FC Stone in New York.
Economists polled by Reuters expect China's official purchasing managers' index (PMI) in January rose to 50.9 from December's 50.6 - a fourth consecutive month of accelerating activity.
Investors got mixed news on Thursday about the recovering U.S. economy when data showed U.S. personal incomes rose last month by the most in eight years, a positive sign for consumer spending, but this was balanced by a rise in jobless numbers.
LME metal prices had been locked in a range for most of the month until this week, but a succession of upbeat economic data helped push copper to fresh highs and achieve a gain of 3 percent in January.
"I think many investors believe we are currently at a macro turning point," said Nicholas Brooks, head of research and product strategy at ETF Securities in London, which has seen record inflows for its base metals funds in recent weeks.
Investors were also emboldened after U.S. Federal Reserve on Wednesday left in place its monthly $85 billion bond-buying stimulus plan and the Bank of Japan signalled that it would unleash more stimulus if needed.
But weak retail sales in Germany, Europe's largest economy, and a big quarterly loss at its biggest bank, Deutsche Bank, tempered investors' enthusiasm. European shares fell for the second day.
Also, traders say momentum on metals markets may be hard to sustain before mid-February, with Lunar New Year looming in China, where physical metals demand has been weak amid high inventories.
In other metals, nickel also touched a 3-1/2 month high and then retreated, dipping 0.1 percent by the close to $18,350 a tonne.
Tin finished 0.6 percent weaker at $24,750 per tonne, lead shed 0.3 percent to $2,431 by the close and aluminium ended down 0.7 percent at $2,090.
Zinc did not trade at the close and was bid at $2,145 a tonne, down 0.5 percent from Wednesday's close.
Metal Prices at 1800 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
COMEX Cu 373.00 -2.00 -0.53 365.25 2.12
LME Alum 2095.25 -8.75 -0.42 2073.00 1.07
LME Cu 8193.50 -32.50 -0.40 7931.00 3.31
LME Lead 2434.00 29.00 +1.21 2330.00 4.46
LME Nickel 18390.00 15.00 +0.08 17060.00 7.80
LME Tin 24730.00 80.00 +0.32 23400.00 5.68
LME Zinc 2143.00 48.00 +2.29 2080.00 3.03
SHFE Alu 15250.00 50.00 +0.33 15435.00 -1.20
SHFE Cu* 59450.00 440.00 +0.75 57690.00 3.05
SHFE Zin 16015.00 235.00 +1.49 15625.00 2.50
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07