* Beijing tells banks to restrict loans for rest of Jan * U.S. dollar hit 5-month high against the euro By Rujun Shen and Jacqueline Wong SHANGHAI, Jan 20 (Reuters) - Shanghai copper fell 1 percent on Wednesday, after China's central bank signalled another move to tighten monetary policy and the dollar gained, but sentiment was still supported by strong China demand outlook. The U.S. dollar hit a five-month high against the euro on continued concern about Greece's fiscal problems and after breaking below a key chart level that could signal a bearish trend for the currency. [USD/] Chinese banking authorities have instructed some major banks to halt their lending during the rest of January after a burst of credit in the first couple of weeks, official media and banking sources said on Wednesday. [ID:nTOE60J010] Just on Tuesday, the central bank lifted the auction yield on one-year bills in its regular open market operations on Tuesday, a second week in a row. [ID:nTOE60I06T] "The series of tightening moves surely has an impact on the market, but the accumulated force has not been strong enough to knock out metals prices," said Zhu Yanzhong, an analyst at Jinrui Futures. Zhu said the upward trend was intact in general, unless the central bank made more pronounced moves, such as rate hikes, any time soon. Shanghai's benchmark third-month copper futures contract SCFc3 ended down 1 percent at 61,000 yuan a tonne, after touching 62,000 yuan in early trade, highest in a week and half. The most-active contract for May delivery SCFK0 fell 1.3 percent to 61,000 yuan a tonne. Three-month copper on the London Metal Exchange CMCU3 pared early gains to lose $26.25 to $7,518.75 a tonne by 0700 GMT. "Shanghai copper is stuck -- investors are optimistic about China's economic data, but also worry about tightening policies," said Peng Qiang, an analyst at COFCO Futures. "Prices are likely to move sideways in an upward channel this week, but it would be difficult to reach previous highs." Beijing is scheduled to release key economic data on Thursday, expected to show China's economy probably gathered strength in December, while consumer price index may have risen at the fastest pace since Feb 2008, making inflation in increasing headache for policymakers. [ID:nTOE60B06T] But some investors and analysts said the liquidity in the market was unlikely to shrink any time soon. "Why did the central bank decide to tighten up? Because bank lending in the beginning of the year has exceeded expectations -- the money is already out there," said a Shanghai-based trader. "I don't see any lack of liquidity in the market in the short term." Barclays Capital expected the central bank to continue to use liquidity management and window guidance to control the pace of bank lending, and did not expect an interest rate hike until the second half of 2010, it said in a research note. "We do not believe the recent policy moves represents the beginning of an aggressive tightening cycle," it said. Base metals prices at 0700 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 7518.75 -26.25 -0.35 7375.00 1.95 SHFE Cu* 61000.00 -630.00 -1.02 59900.00 1.84 LME Alum 2285.00 -8.00 -0.35 2230.00 2.47 SHFE Alum* 17410.00 -325.00 -1.83 17160.00 1.46 COMEX Cu** 343.70 8.20 +2.44 332.75 3.29 LME Zinc 2510.00 7.00 +0.28 2560.00 -1.95 SHFE Zinc 20795.00 -155.00 -0.74 21195.00 -1.89 LME Nickel 19005.00 -195.00 -1.02 18525.00 2.59 LME Lead 2430.00 5.00 +0.21 2432.00 -0.08 LME Tin 17800.00 -175.00 -0.97 16950.00 5.01 LME/Shanghai arb^ -942 Dollar/yuan 6.8272 \ 6.8292 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Editing by Ed Lane)

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