By Pratima Desai LONDON (Reuters) - Copper prices fell on Wednesday as investors retreated on fears about global economic growth and lower demand from China and the United States, the world's top two consumers. The metal, used widely in the power and construction industries, was trading down at $7,850 a tonne at 1000 GMT compared with $7,915 at the close on Tuesday. Analysts reckon China consumes about 25 percent of global copper output, estimated at around 18 million tonnes, while the United States uses about 15 percent. Growing perceptions that Chinese demand for copper will slip as the country's government tries to curb growth and price pressures are fast gaining ground and have weighed on copper since it hit a record high of $8,880 a tonne on April 17. "The demand outlook for metals is weak," said David Thurtell, analyst at BNP Paribas. "The Fed has done as much as it needs to on interest rates to shore up U.S. growth. But the supply of credit is still an issue and European and Japanese growth is slowing. Expectations that interest rates in the United States have bottomed were also reinforced by Federal Reserve chairman Ben Bernanke on Tuesday, when he issued a rare warning on inflationary risks. "Most investors are now looking at rising interest rates in developing countries and inflationary pressures," said Daniel Brebner, commodities analyst at UBS. "There is a real concern that you are going to see demand slow down quite significantly." LOSE CAPACITY However, prices are unlikely to fall far as analysts expect supply shortfalls and low stocks to underpin copper. Copper stocks in LME warehouses fell 650 tonnes to 122,250, while aluminium stocks slipped 1,525 tonnes to 1,073,375. Aluminium, used in power, packaging and transport, was trading down at $2,895 a tonne from $2,926 a tonne on Tuesday. Current levels are not far from the costs paid by the highest cost or marginal cost producers. "$2,800 is the market's perception of the level where we could lose capacity, especially in China which houses most of the marginal cost producers," a London-based metals trader said. He added that high energy prices would support aluminium as electricity costs account for one-third of smelting costs. Severe winter weather in China earlier this year, which hit power supplies, convinced many investors to buy aluminium. Many are betting that power disruptions over the summer months in China, with about 30 percent of global aluminium production, could push prices towards the record $3,310 a tonne set in May 2006. Rising thermal coal prices are also likely to fuel rising electricity prices. "There is a possibility we see significant cost increases for Chinese producers this summer ... There's the possibility some production capcity gets shut down," Brebner said. Zinc was at $1,966 a tonne from $1,939, lead at $2,020 from $2,055.5, tin at $21,050 from Tuesday's last bid at $21,150 and nickel at $22,125 from $22,300. Falling demand from stainless steel makers and expectations of significantly higher mine supply have pushed nickel prices down about 40 percent since early March. Metal Prices at 1014 GMT Metal Last Change Percent Move End 2007 Ytd Percent move LME Cu 7840.00 -75.00 -0.95 6670.00 17.54 SHFE Cu* 59770.00 -790.00 -1.30 56880.00 5.08 LME Alum 2895.00 -31.00 -1.06 2403.00 20.47 SHFE Alu* 18765.00 -60.00 -0.32 18180.00 3.22 COMEX Cu** 357.80 -0.80 -0.22 303.05 18.07 LME Zinc 1960.00 21.00 +1.08 2370.00 -17.30 SHFE Zinc* 16645.00 -145.00 -0.86 18950.00 -12.16 LME Nick 21950.00 -350.00 -1.57 26350.00 -16.70 LME Lead 2005.00 -50.50 -2.46 2550.00 -21.37 LME Tin 21000.00 50.00 +0.24 16400.00 28.05 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 | 
