* Aluminum bounces from August 2017 lows
* LME/ShFE arb: http://bit.ly/2wZSAEz
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline from BEIJING)
LONDON, April 4 (Reuters) - Copper fell the most since early February on Wednesday after China slapped tariffs on U.S. goods and began a dispute procedure against duties imposed by Washington on Chinese products.
Benchmark copper on the London Metal Exchange fell 2.1 percent to $6,652 per tonne by 1131 GMT, snapping a four-session winning streak. The metal used in power and construction was on track for its worst one-day performance since Feb. 2.
The U.S. administration on Tuesday slapped 25 percent tariffs on about $50 billion worth of goods, including some metals products, aimed at dealing a setback to China's efforts to upgrade its manufacturing base.
"The escalation of trade war between China and the U.S is weighing on investor sentiment and this is hurting everything that is risk-sensitive," said FOREX.com analyst Fawad Razaqzada.
TRADE: Less than 11 hours after the U.S. tariffs were announced China quickly hit back on Wednesday, retaliating with a list of similar duties on U.S. imports including soybeans, planes, cars, whiskey and chemicals.
DOLLAR: The greenback eased against a basket of major currencies on Wednesday, helping to cap losses in the downbeat metals market.
COPPER INVENTORIES: Total stocks of copper in LME-approved warehouses <MCUSTX-TOTAL> eased to 378,075 tonnes but remained near five-year highs touched last week. Over 80 percent of this total stock was available to the market.
MARKETS: The speed with which the trade struggle between Washington and Beijing is ratcheting up led to a sharp selloff in global stock markets and commodities.
COPPER OUTLOOK: "We expect demand drivers in China to continue to moderate, as we expect the focus on corporate deleveraging to increase, and real estate completions to slow," Canaccord Genuity said in a note.
"On the supply side, we continue to view the risk of labor-related disruptions as small, as miners are likely to be more accommodative in the current commodity pricing environment."
CHINA ECONOMICS: China, the world's top metals consumer, saw services sector growth ease to a four-month low in March, according to the private Caixin/Markit services purchasing managers' index (PMI), while its central bank renewed a pledge to crack down on the unregulated shadow banking sector.
ALUMINIUM: LME aluminum eased 1 percent to $1,998 per tonne, after touching its lowest since August, partly due to higher stocks in ShFE warehouses.
OTHER METALS: Zinc, used to galvanize steel, eased 1.2 percent to $3,240 per tonne, lead fell 1 percent to $2,368, tin slipped 1.5 percent to $20,890 and nickel slid 2.7 percent to $13,105.
(Additional reporting by Tom Daly; editing by John Stonestreet)