* Nickel to set record 60,000T surplus this year - INSG
* Indonesia tin output jumps 37.6 percent in March
* U.S. retail sales rise modestly, auto sales fall
* Coming up: US President's speech on budget plan: 1735 GMT
(Recasts, updates with closing prices, adds comment)
By Melanie Burton and Sue Thomas
LONDON, April 13 (Reuters) - Copper reversed gains on Wednesday on concerns about demand after U.S. auto sales fell and on reports China would move to quell inflation, lessening the country's appetite for commodities.
LME copper closed at $9,515 a tonne, from $9,630 at the close on Tuesday after hitting an intra-day high of $9,633.75
"I think at this point the market is waiting for some kind of stronger direction," said Standard Chartered analyst Daniel Smith.
"I think we will go higher; it's just a question of timing. But for now, with all these worries about China and to some extent the problems in Japan, the market is in a bit of a wait-and-see mode," he said.
China's Xinhua news agency reported on Wednesday that the the government would use everything at its disposal to stabilise prices and bring inflation under control.
Xinhua said the government would use "a mix of tools such as reserve requirements and interest rates and further improve the yuan exchange rate formation mechanism to control social financing aggregate at a reasonable level".
China's first-quarter GDP growth is seen slowing and inflation accelerating to a 32-month high in March. Its GDP and March economic indicators are due out on Friday.
Japan's government on Wednesday downgraded its assessment of the economy for the first time in six months to reflect last month's earthquake and tsunami. Japan's auto industry, a big metals consumer, has been badly hit.
In the United States, the world's largest economy, sales at retailers rose slightly less than expected in March and auto sales plunged, a government report showed, pointing to slower consumer spending in the first quarter.
Danske Bank analyst Christin Tuxen said risk appetite and aversion would continue to sway the market, with the week's earnings and data reports key signals on the state of the global economic recovery.
Tuxen said U.S. data such as retail sales could refocus markets on the possibility of demand destruction if the recovery in the world's biggest economy begins to give way.
"The market is taking stock of what happened in the oil market yesterday, where we saw a risk-off attitude ... and a massive sell-off in oil prices that drove both aluminium and copper lower as well."
Oil rose towards $123 on Wednesday, partly reversing the deep sell-off, after U.S. gasoline stocks dived and talks on Libya showed divisions among foreign powers seeking an end to the violence racking the OPEC member.
For the longer term, falling ore grades and a lack of new large-scale mines have narrowed the copper supply pipeline, which is also helping copper prices, Deutsche Bank analyst Daniel Brebner said.
Global miner Rio Tinto forecast a 10 percent drop in refined copper output for this year to 350,000 tonnes, in its latest production report.
NICKEL SURPLUS
The International Nickel Study Group (INSG) said it expected the global nickel market to record a 60,000 tonne surplus this year, compared with a deficit of 30,000 tonnes in 2010.
Traders said that demand for the metal most commonly used in stainless steel remains lacklustre, with orders weak going into the second quarter. Stocks rose on the LME, the latest data showed.
LME nickel closed at $26,250, compared with $26,700 at Tuesday's close.
LME copper inventories also rose in latest data by 3,225 tonnes and have now surged by more than 100,000 tonnes from mid-December, taming upside price potential.
"With the stock increases and premiums weak for warrants on the physical side, the LME price has been ahead of the physical market," a London trader said.
Capping gains in battery material lead was a 4,950 tonne rise in inventories in the Malaysian port of Klang.. Lead closed at $2,679.5 against $2,725.
LME zinc closed at $2,421 a tonne from $2,469, while tin was $32,250 from $32,550.
Indonesia's refined tin exports in March rose 37.6 percent to 9,051.46 tonnes, compared with 6,576.01 tonnes in the same month a year ago, data from the trade ministry showed today.
LME aluminium closed at $2,642 from $2,660.
Metal Prices at 1612 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent
move COMEX Cu 431.55 -6.80 -1.55 444.70 -2.96 LME Alum 2642.00 -18.00 -0.68 2470.00 6.96 LME Cu 9505.00 -125.00 -1.30 9600.00 -0.99 LME Lead 2679.00 -46.00 -1.69 2550.00 5.06 LME Nickel 26250.00 -450.00 -1.69 24750.00 6.06 LME Tin 32200.00 -350.00 -1.08 26900.00 19.70 LME Zinc 2421.00 -48.00 -1.94 2454.00 -1.34 SHFE Alu 16790.00 10.00 +0.06 16840.00 -0.30 SHFE Cu* 72180.00 -130.00 -0.18 71850.00 0.46 SHFE Zin 18565.00 -25.00 -0.13 19475.00 -4.67 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Editing by Jane Baird)