METALS-Copper Buckles under Weight of Demand Doubts

NEW YORK/LONDON, Aug 20 (Reuters) -

Copper stumbled on Friday as investors dumped risky assets like industrial metals after soft jobs and manufacturing data from the United States, the world's largest economy, revived fears about economic growth and slowing demand prospects.

"It's correlated to the bearish economic news that hit yesterday," said Jeff Pritchard, analyst with Altavest Worldwide Trading in Mission Viejo, California.

Copper for September delivery HGU0 on the COMEX metals division of the New York Mercantile Exchange fell 2.75 cents to finish at $3.2910 per lb, after dealing between $3.2495 and $3.3315.

On the London Metal Exchange (LME), benchmark copper for three-month delivery CMCU3 was untraded at the close, but bid at $7,252 a tonne from Thursday's close $7,309.

On Thursday, it touched a two-week high of $7,496 a tonne.

The trigger for two-day price reversal was U.S. data on Thursday showing claims for unemployment benefits rose for a third week running and a regional manufacturing index moved into its first contraction in a year -- both reviving fears of a double-dip recession in the economy.

 "The U.S. jobs data from yesterday has prompted concerns over economic growth and the dollar is stronger," said David Wilson, analyst at Societe Generale.

The dollar rose against the euro, which came under pressure on worries about growth in the euro zone after comments from an official raised expectations the European Central Bank will keep monetary conditions for some time. [USD/]

A higher U.S. currency makes dollar-denominated commodities more expensive for holders of other currencies.

The negative sentiment dominated equity markets, as well.

"There is a big debate raging about where the global economy is going, " said Jaspar Crawley, metals broker at Triland Metals. "We are not in for a double-dip recession but we could be in for a jobless recovery."

U.S. GROWTH WORRIES

Worries about U.S. growth come at a time when investors are expecting growth in the world's top base metals consumer, China, to ease for the second half of 2010 as the country tightens policy to combat inflationary pressures.

"If inflationary pressures in the East become sufficiently high, this could have a negative impact on physical metal demand,Deutsche Bank said in a note.

With base metal sentiment at the mercy of macroeconomic data, inventory levels took a back seat, despite a falling trend in recent weeks.

Latest LME data showed copper stocks slipped 1,800 tonnes to 401,725 tonnes, having fallen from 6-1/2 year highs at 555,07tonnes in mid-February.

Aluminum CMAL3 ended at $2,040 from $2,066 on Thursday. Earlier it saw a one-month low at $2,015.

LME stocks for the metal stand at 4.46 million tonnes, down from a record level above 4.64 million tonnes in January. A large portion of the stocks are tied up in finance deals.

Significant long positions amounting to 30 to 40 percent of warrants on LME stocks and cash contracts attracted attention from market participants.

The worries about supplies because of the large holdings by two entities have narrowed the discount for cash material against the three-month contract to around $5 a tonne, from levels near $30 a tonne in June.

Worries about near-term supplies also pushed the tin market into backwardation, with a premium for cash material over the three-month contract of $70 a tonne. That compared with a small discount or contango last week.

Concerns that unseasonably long rains may hamper mining in top refined tin exporter Indonesia, remain.

Tin CMSN3 dropped $450 to close at $20,650 a tonne and nickel CMNI3 shed $245 to end at $21,550.
Zinc's CMZN3 last bid was $2,058 a tonne from $2,090 on Thursday and lead CMPB3 closed down $49 at $2,056 a tonne. Metal Prices at 1755 GMT COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 329.00 -2.85 -0.86 334.65 -1.69 LME Alum 2040.00 -26.00 -1.26 2230.00 -8.52 LME Cu 7260.00 -49.00 -0.67 7375.00 -1.56 LME Lead 2055.00 -50.00 -2.38 2432.00 -15.50 LME Nickel 21530.00 -265.00 -1.22 18525.00 16.22 LME Tin 20650.00 -450.00 -2.13 16950.00 21.83 LME Zinc 2055.00 -35.00 -1.67 2560.00 -19.73 SHFE Alu 15310.00 -200.00 -1.29 17160.00 -10.78 SHFE Cu* 57050.00 -1210.00 -2.08 59900.00 -4.76 SHFE Zin 16950.00 -630.00 -3.58 21195.00 -20.03