(Rewrites, adds New York dateline, updates with New York closing copper price, adds graphic and analyst comments)

* Copper extends profit-taking retreat from Jan. high

* China demand in focus as businesses return from holiday

* Euro slips vs dollar; Greek worries continue

* Coming up: U.S. January payrolls data on Friday

By Chris Kelly and Harpreet Bhal

NEW YORK/LONDON, Feb 2 (Reuters) - Copper fell more than 1 percent on Thursday, its fourth down day in the past five trading sessions, as the market continued to retreat from its January rally amid Greek debt default jitters and signs of sluggish demand from top buyer China.

Copper failed to find support in another batch of upbeat economic data in the United States and from optimistic remarks from Federal Reserve Chairman Ben Bernanke, who saw signs some of the uncertainty dampening U.S. business investment, including European banking woes, might be waning.

Instead, investors continued to cash in on the metal's surprisingly strong start to the year in which prices climbed more than 14 percent, trough to peak, to four-month highs. Caution in front of Friday's key monthly U.S. employment data added to the profit-taking push.

"The market is a little over extended. The bull trend is intact, but the market has just run out of steam and needs a little bit of consolidation," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey.

"While there are signs of improvement in the global situation, copper has discounted an awful lot of that. I think we need some new news to get the market into position to move up to $4 ($8,818 per tonne)."

London Metal Exchange (LME) benchmark copper fell $95 or 1.1 percent to end at $8,345 a tonne, widening its retreat from last week's four-month peak at $8,679.50 to about 4 percent.

In New York, the key March COMEX contract shed 6.10 cents or 1.6 percent to settle at $3.7810 per lb, after dealing between $3.7670 and $3.8195.

It hit a four-month high last Friday at $3.9390.

Analysts see good support at around the $8,000 ($3.60) level given copper's robust fundamental picture, but warned a recent climb in net speculative copper length could accelerate the downside if sentiment begins to shift.

"The danger here is the substantial net long commitment to the market," LOGIC Advisors' O'Neill said.

Volumes picked up as the market continued to unwind from the highs. Over 56,000 lots traded in late New York business, up more than 25 percent from the 30-day norm, according to preliminary Thomson Reuters data.

Copper extended declines this week amid signs that Chinese consumers are also reluctant to buy copper at current levels.

"The recent price move was in anticipation of Chinese buying beyond the Lunar New Year. I think in the short term the danger is that people are going to be disappointed," said Nic Brown, head of commodity research at Natixis.

"Physical (copper) premiums (in China) are coming off. That to me is a clear indication that you have a build-up of copper in bonded warehouses, which suggests that the absolute levels of demand in China at the minute are not good."

Credit Suisse said in a note: "For prices to increase further from here, demand indications like physical premia or stocks would in our view need to provide more visible evidence of an improved environment."

Currency-related selling pressure also hit the metal. The euro surrendered earlier gains against the dollar amid ongoing concerns about the lack of resolution on the Greek sovereign debt crisis.

A stronger dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.

Worries about a resolution to Europe's debt crisis remain, and dismal corporate results showed Europe's economy is suffering increasingly from the problems.

XSTRATA/GLENCORE MERGER

In industry news, miner Xstrata is in talks with Glencore over an all-share merger of equals, confirming reports of a deal that could create a combined mining and trading group worth more than 50 billion pounds ($79 billion).

"The fact that sentiment amongst companies in the commodities sector is positive and that they expect higher prices in the long term is evident from a planned major acquisition in the sector," Commerzbank analysts said in a note.

"A higher concentration on the producer side is likely to support prices in the medium to long term."

Metal Prices at 1853 GMT

Metal Last Change Pct Move End 2011 Ytd Pct

move COMEX Cu 378.60 -5.60 -1.46 343.60 10.19 LME Alum 2195.00 -70.00 -3.09 2020.00 8.66 LME Cu 8344.00 -96.00 -1.14 7600.00 9.79 LME Lead 2164.00 -71.00 -3.18 2035.00 6.34 LME Nickel 20875.00 -100.00 -0.48 18710.00 11.57 LME Tin 24145.00 -10.00 -0.04 19200.00 25.76 LME Zinc 2095.00 -36.00 -1.69 1845.00 13.55 SHFE Alu 16270.00 55.00 +0.34 15845.00 2.68 SHFE Cu* 59880.00 380.00 +0.64 55360.00 8.16 SHFE Zin 15945.00 170.00 +1.08 14795.00 7.77 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

source:sharenet