Jul 25, 2011 (Dow Jones Commodities News via Comtex) -- --US debt worries weigh on sentiment for growth-sensitive copper

--Production disruptions, bullish outlook limit losses

--Labor strike at world's No. 1 copper mine continued for a fifth day

By Matt Day
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures fell slightly Monday as traders were cautious toward industrial metals and other assets seen as risky bets as long as negotiations to lift the U.S. debt ceiling remain stalled.

Copper for September delivery, the most actively traded contract, settled down 0.35 cent, or 0.1%, at $4.4065 a pound on the Comex division of the New York Mercantile Exchange.

U.S. leaders Monday had little to show for weeks of negotiations to end the political gridlock and raise the country's borrowing limit, with Republican party leaders pressing ahead with their own deficit-reduction plan and Senate Democrats working on a backup plan that could be brought to a vote should talks remain stalled. Copper came under pressure beginning late last week from worries that a failure to raise the U.S. debt ceiling would roil global markets and upset the sluggish economic recovery.

The industrial metal is sensitive to the economic outlook because of its widespread uses in construction and manufacturing.

"The debt problems are giving us a little pause today," said Frank Lesh, a broker and analyst with FuturePath Trading. "We've climbed a long way. You need to be real bullish to be paying up here."

Copper spent much of May and June in indecisive trading near $4 a pound, pressured by worries that global demand would suffer from sluggish growth in Europe and the U.S. and a potential slowdown in China. But supply disruptions and steady economic data from China brightened sentiment, pushing copper sharply to three-month highs last week.

Copper's losses Monday came "with the macro picture weighing over the market like a dark cloud," Barclays Capital analyst Gayle Berry said in a note.

Despite the big-picture economic worries, copper remains supported by the widely held view that mine-production growth will fail to keep up with rising demand this year.

Output shortfalls and other indicators suggest "copper production will struggle to grow at all this year," Berry added.

A strike at the world's largest copper mine continued for a fifth day Monday. A mine workers union at the Escondida mine in Chile, which is controlled by BHP Billiton Ltd. (BHP, BHP.AU), walked off the job Thursday over contract demands they say have gone unmet, including an increase in their year-end bonuses.

The mine stands to lose 3,000 tons of copper production for every day workers are on strike.

Chile is the world's largest copper miner, accounting for about 30% of global supply.

Copper settlements (ranges include electronic and pit trading):
July $4.4015; down 0.30 cents; Range $4.3700-$4.4110
Sept $4.4065; down 0.35 cents; Range $4.3705-$4.4200