* Oil falls more than $1 on crude stock build
* Copper slides nearly 6 pct, gold loses 1 pct
* U.S. grains lower, Argentina outlook brightens
By Sue Thomas
LONDON, Jan 29 (Reuters) - Oil and metals prices fell on Thursday as fears about falling demand, particularly from China, and rising physical stocks dampened optimism arising from recent winning streaks.
Grains also eased, as rains brightened the outlook for key exporter Argentina, which is suffering its worst drought in 48 years.
Oil fell more than $1 towards $41 a barrel after data showing a further build in crude stocks in the United States piled on more evidence of falling demand for oil from the world's largest fuel consumer. [O/R]
U.S. crude CLc1 fell $1.09 a barrel to $41.07 by 1246 GMT, while London Brent crude LCOc1 lost 31 cents to $44.59.
But prices got some support from remarks by OPEC Secretary General Abdullah al-Badri at the World Economic Forum in Switzerland that OPEC would not hesitate to act again if the oil price remains low. [ID:nWLA6191]
OPEC's output cuts since the second half of 2008, in reaction to the fall of more than $100 in oil prices since July, have also helped to put a floor under prices.
Copper MCU3 fell nearly 6 percent to $3,139 a tonne MCU3 after data showed London Metal Exchange stocks rose by the biggest daily amount since August 2004 to the highest since November 2003. [MET/L]
The metal used in power and construction and a key gauge of economic activity was trading at $3,198 a tonne at 1040 GMT on the LME compared with $3,330 at the close on Wednesday.
Comments by China's Premier Wen Jiabao at the World Economic Forum that the country's economy had been hit hard by the global financial crisis intensified fears about demand. [ID:nLS373881] China is the world's largest consumer of copper. "Many people were secretly hoping that China would pull the rest of the world out of this current situation. China is saying that's not possible," said David Wilson, analyst at Societe Generale.
Gold prices gave up another 1 percent on Thursday, extending the losses of the two previous sessions, as a firmer dollar curbed buying of the precious metal as a currency hedge. [GOL/]
It also lost its edge due to waning interest in bullion as a haven from risk and a resurgence of demand worries after Indian gold imports plunged 90 percent in January.
Spot gold XAU= slid to $878.10/880.10 an ounce at 1021 GMT from $885.60 in New York late on Wednesday. The precious metal has fallen 4 percent from the more than three-month high of $915.30 it hit on Monday.
"After a pretty impressive run last week we saw profit taking when gold failed to break through $920 an ounce," Commerzbank senior trader Michael Kempinski said. "After the rally in stock markets, people are thinking twice about taking in more gold at these higher levels."
The dollar climbed overnight as investors took heart from U.S. Congress' headway on a $825 billion stimulus package. [ID:nSP417718] European shares fell, after gains earlier this week, dragged down by commodity and banking stocks. [.EU]
U.S. grain futures edged lower as the market awaited further weather updates from Argentina. [GRA/] Thunderstorms brought rain to some parts of Argentina on Wednesday with further storms forecast in areas including the key crop region of Cordoba.
Chicago Board of Trade corn for March delivery CH9 was down 1.63 percent at $3.78-1/4 per bushel by 1212 GMT, while March soybeans dropped 0.71 percent to $9.76 per bushel. Wheat for March delivery lost 1.47 percent to $5.86-1/4 per bushel.
In Europe, milling wheat futures eased in line with CBOT futures.
In a rare bright spot for commodities, cocoa prices in London set a new 24-year peak while arabica coffee looked to consolidate after its recent climb to the highest levels in nearly four months as a Reuters poll saw prices up this year.
Arabica coffee prices are forecast to rise 20 percent by the end of 2009, while robusta may jump 18 percent, spurred by a drop in global output and tighter stocks, a Reuters poll showed. [ID:nSP229639]
But raw sugar futures eased as producer selling pulled prices back from a four-month high set earlier this week and India deferred a cabinet decision on whether to cut or eliminate import duty. (Reporting by Pratima Desai, Jan Harvey, Michael Taylor and Joe Brock in London, Valeria Parent in Paris and Bruce Hextall in Sydney; Editing by Peter Blackburn)