Jan 05, 2012 NEW YORK (Dow Jones)--Copper futures ticked lower on Thursday, but ended well above the session's low as investors weighed the impact of continued financial turmoil in Europe against surprising strength in the U.S. labor market.

The most actively traded copper contract, for March delivery, fell 0.8 cent, or 0.2%, to settle at $3.4265 a pound on the Comex division of the New York Mercantile Exchange.

Copper sank in overnight trading as the euro fell Thursday to the lowest level since September 2010. Investors have worried that the euro-zone debt crisis could rattle the industrial economy and curb demand for metals.

Overnight deposits with the European Central Bank reached a fresh record high Wednesday, a sign of increased concerns over the availability of cash in the currency union. Meanwhile, worries mounted that though Hungary doesn't use the European common currency, deepening strain in its financial system could take a toll on already weakened euro-zone banks.

Copper is used in everything from plumbing and wiring to automobiles and electronics, making prices sensitive to the global economic outlook.

Copper futures pared the bulk of their earlier losses as U.S. equities markets recovered on robust private-sector hiring in the world's top economy.

"Some positive U.S. data points are keeping [copper] prices from falling off substantially," said Adam Klopfenstein, a market strategist with Archer Financial Services. "But until you get some better global news," the market would likely struggle to hold gains above the $3.50 a pound mark.

The private sector added 325,000 jobs in December, according to Automatic Data Processing's monthly report, well above economists' expectations for a gain of 175,000 and the latest sign that the long-struggling labor market in the world's largest economy was recovering.

In a separate report, the Labor Department said the amount of people seeking new unemployment benefits in the U.S. last week fell by more than analysts had forecast. The four-week average of new jobless claims, which offers a less volatile picture than weekly figures, decreased to the lowest level since June 2008.

Some traders are looking ahead to Friday's closely watched monthly government report on U.S. unemployment.

Copper futures had rallied to their highest point since Dec. 9 on Tuesday, as strength in manufacturing data out of the U.S. and China lifted demand hopes.

Despite the upbeat readings on the U.S. and China, analysts said the metal's fortunes would also likely remain tied to investor perception of Europe's debt crisis.

Copper settlements (ranges include electronic and pit trading):
Jan $3.4225; down 0.70 cents; Range $3.3965-$3.4245
Mar $3.4265; down 0.80 cents; Range $3.3845-$3.4800