May 18, 2012 NEW YORK (Dow Jones)--Copper futures fell on Friday, capping a 4.9% drop during the week as strains in Europe's financial system and worries about their impact on global growth spurred investors to dump the industrial metal.

The most actively traded copper contract, for July delivery, fell 1.05 cent, or 0.3%, to settle at $3.4685 a pound on the Comex division of the New York Mercantile Exchange, the lowest settlement price since Jan. 9.

Greece's political parties this week failed in their efforts to form a coalition government, setting up another round of elections and raising worries that the country could exit the euro zone. That rattled the financial sectors in Spain and Italy. Governments in both countries have struggled to keep their borrowing costs down.

The worry is that more economic turmoil in the euro zone could erode the currency union's appetite for copper. A breakup of the euro zone could also rattle global trade, potentially limiting demand for the metal elsewhere.

Copper set a series of four-months lows early this week, before carving out a slight gain on Thursday as currency markets calmed. The upward momentum continued early Friday, tracking moves in the euro, but erased those gains before the settlement.

"Bears came in to take advantage of the pre-weekend rally," traders with RBC Capital Markets said in a note. "Look for next week to be dominated by European debt (and) banking issues."

Europe's debt crisis added to the laundry list of demand worries already weighing on the copper market this month. In China, by far the top copper consumer in accounting for 40% of global consumption, recent readings on growth and industrial production have been well short of expectations. The pace of growth in the U.S. seemed to cool after a hot start to the year.

Copper is sensitive to the growth outlook because of its widespread uses in construction and manufacturing.

"Investors remain very risk-averse given the political uncertainties in the euro zone," analysts with Commerzbank said in a note.

Copper settlements (ranges include electronic and pit trading):
May $3.4695; down 1.00 cent; Range $3.4680-$3.5050
Jul $3.4685; down 1.05 cent; Range $3.4515-$3.5160