NEW YORK, Aug 10, 2011 (Dow Jones) --Copper futures slumped alongside equities as concerns that France's credit rating may be downgraded roiled markets.

France is the latest in a series of euro-zone countries to come under market scrutiny as the cost of government debt insurance soars.

Talk that the second-largest economy in the euro bloc, behind Germany, may lose its coveted triple-A credit rating pressured markets on both sides of the Atlantic as investors shed risky assets like equities and commodities.

Copper futures fell amid concerns that a French downgrade would further stall economic growth in Europe. Copper is widely used in consumer goods like laptops, air conditioners and cars, and demand for these products declines when the economy falters.

The most actively traded contract, for September delivery, fell 8.15 cents, or 2.1%, to settle at $3.8885 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper settled down 8.15 cents, or 2.1%, at $3.8855 a pound.

The Federal Reserve lowered its outlook on the U.S. economy and said the exceptionally slow pace of growth warranted keeping interest rates near zero for the next two years. The monetary policy announcement was made Tuesday, after copper floor trading closed for the day.

"Copper is vulnerable to the slow economic outlook and the Fed [meeting] minutes indicate the economic pick up isn't going to happen any time soon," said Frank McGhee, head precious metals dealer with Integrated Brokerage Services in Chicago.

Copper futures fell in sympathy with the Dow Jones Industrial Average. Copper has struggled to recover from recent losses, which pushed prices below $4 a pound for the first time in over two months.

"We're repricing our assets to match our new outlook, which is not quite as optimistic as it was before," said Frank Lesh, broker and analyst with FuturePath Trading.

A substantial slowdown in the U.S. economy could tip the balance in the physical copper market and pressure prices lower. In recent years, copper mine supply has struggled to keep pace with strong demand from fast-growing countries like China, the world's top copper consumer. However, a substantial decline in copper demand from the U.S., the second-largest copper consumer, could reverse this trend.

"If the Fed's revision is correct ... you could see copper stockpiles build and that will keep pressure on the market because there will be more than enough supply," McGhee said.

A welcome respite, however, came from Chinese economic data overnight, which showed a 9.5% monthly uptick in July copper imports, though levels are still down 11% from last year.

"Until we get a clearer picture on demand, copper is going to suffer," said Lesh.

Copper settlements (ranges include electronic and pit trading):

Aug $3.8855; down 8.15 cents; Range $3.8745-$4.0310
Sep $3.8885; down 8.15 cents; Range $3.8690-$4.0730