* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm20
* Market looking ahead to China data on industrial output
* China commodity imports suggest rally may be fading (Adds closing prices)
LONDON, Sept 12 (Reuters) - Copper prices slid on Tuesday as funds cut bets on higher prices, inventories in London Metal Exchange warehouses jumped and the dollar steadied at higher levels.
Benchmark copper on the LME ended down 1.2 percent at $6,668 a tonne, after hitting a three-year high of $6,970 a tonne last week. Prices are up around 20 percent this year.
"The move from $6,000 to $7,000 in a month cannot be explained by fundamentals, which haven't changed and which at this time of the year are normally, seasonally weak," said Julius Baer analyst Carsten Menke.
"Mine production is recovering from disruptions earlier this year. Chile is reporting a growth in output and the issues between the Indonesian government and Freeport seem to have been resolved."
SPECULATORS: LME data shows funds' net long copper position at 71,827 lots, or more than 1.8 million tonnes, is down from a peak of 78,527 lots late in August but still near its highest since last December. <LME-CA-MNET>
STOCKS: Copper stocks in LME approved warehouses rose 10,300 tonnes to 218,725 tonne but remain 40 percent below this year's peak of 354,650 tonnes.
DOLLAR: Also pressuring metals was a firmer U.S. currency, making dollar-denominated commodities more expensive for holders of other currencies.
CHINA IMPORTS: China's imports of major commodities in August illustrate both why prices have gained in recent months and why this rally may be running out of steam.
CHILE: The world's largest copper producer saw output rise to 473,544 in July, up more than 5 percent year-on-year. Its output earlier this year fell due to a strike at Escondida, the world's largest copper mine.
INDONESIA: Indonesia and Freeport-McMoRan reached an agreement late last month to allow the U.S. miner to apply for a permit to keep operating its giant Grasberg copper and gold mine in the country. Grasberg is the world's second-biggest copper mine.
DATA: Base metals markets are looking ahead to data from China on new loans, investment and industrial production due this week for clues as to the strength of demand over coming months.
PRICES: Aluminium closed up 0.7 percent at $2,137 a tonne, zinc fell 0.7 percent to $3,061, lead rose 1.5 percent to $2,312, tin slipped 0.4 percent to $20,675 and nickel climbed 2 percent to $11,990.
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(Additional reporting by Eric Onstad; editing by Keith Weir and David Clarke)