Dec 01, 2011 NEW YORK (Dow Jones)--Copper futures pulled back on Thursday, as signs of slowing manufacturing activity in China and the euro zone curbed the demand outlook for the industrial metal and spurred traders who had bet on rising prices to reverse those positions.

The most actively traded copper contract, for March delivery, fell 4.15 cents, or 1.2%, to settle at $3.534 a pound on the Comex division of the New York Mercantile Exchange.

The December-delivery contract fell 1.2% to $3.522 a pound.

Futures came under pressure in overnight trading after the Chinese government's gauge of manufacturing-sector activity showed contraction in November for the first time since February 2009.

China is the world's largest copper consumer, accounting for almost 40% of refined consumption last year. Worries that China's appetite for metals was slowing played a major role in knocking copper prices down from near-record levels this summer.

It will likely take monetary easing from Beijing to stimulate renewed demand growth there, traders with RBC Capital Markets said in a note.

A reading on euro-zone manufacturing was similarly gloomy, showing activity shrank in November, coming in at a 28-month low. The currency union is the world's No. 2 copper consumer.

Copper is used in a wide range of applications in construction and manufacturing, making prices sensitive to the economic outlook.

"You've been hearing slower numbers from China for the last month or so," said Bob Haberkorn, a market strategist with R.J. O'Brien. "On top of that, (Wednesday's central bank action) is a worldwide product of the European crisis. The maneuvers show what a dire crisis this really is."

Copper futures had climbed to a three-week high Wednesday after six of the world's major central banks announced steps to lower dollar borrowing costs to stabilize the global financial system. The move eased concerns that the euro zone was sliding toward a credit crunch that would slash industrial activity, but some market participants later came to view the move as a stop-gap measure rather than a long-term solution to the euro zone's debt crisis.

Futures extended their losses Thursday after U.S. weekly jobless claims unexpectedly rose last week, a bearish signal ahead of Friday's closely watched monthly reading on unemployment in the world's largest economy.

Better-than-expected readings on U.S. housing and manufacturing later Thursday weren't enough to reverse copper's losses, as traders continued to focus on the global economic outlook.

"The market really needs the U.S. to continue to show signs of a stronger recovery, otherwise we think the situation in Europe will continue to put pressure on commodity prices," RBC traders wrote.

Copper settlements (ranges include electronic and pit trading):
Dec $3.5220; down 4.10 cents; Range $3.5060-$3.5815
Mar $3.5340; down 4.15 cents; Range $3.5175-$3.5995