METALS-Copper hits 3-month low, recovery doubts dominate

* U.S. jobs data mixed

* Euro zone sovereign default worries escalate

* All metals hit multi-month lows

(Recasts with New York closing copper price, adds NEW YORK
dateline/byline and analyst comments)

By Chris Kelly and Pratima Desai

NEW YORK/LONDON, Feb 5 (BestGrowthStock) – Copper fell to its lowest
level in more than three months on Friday, as a stronger dollar and
worries over the health of the global economy outweighed mixed U.S.
jobs data.

Benchmark copper for March delivery (HGH0: ) on the New York
Mercantile Exchange’s COMEX division slipped 2.15 cents to settle at
$2.8575 per lb, after dealing between $2.8905 and $2.8110, which
marked is lowest level since Oct. 15.

On the London Metal Exchange (LME), three month copper (MCU3: )
ended at $6,265 a tonne, from $6,390 at the close on Thursday.
Earlier, the metal used in power and construction tumbled to $6,225
a tonne, another low dating back to the middle of October.

U.S. employers unexpectedly cut 20,000 jobs in January, but the
unemployment rate surprisingly fell to a five-month low of 9.7
percent, Labor Department data showed. [ID:nN04115255]

“An unemployment rate below 10 percent is not a bad sign – it
was generally mixed jobless (data), but overall, in the wider scheme
of things it did not really matter,” said Michael Widmer, analyst at
BofA Merrill Lynch.

“Sovereign debt remains a critical issue right now, it’s
indirectly related to metals but it’s overall a concern about the
strength of economic recovery.”

The dollar rose against the euro to its highest level since May
as the cost of insuring the debt of Greece, Portugal and Spain
against default hit record highs on worries over their fiscal
positions. [USD/]

A stronger dollar makes dollar-priced metals more expensive for
non-U.S. investors.

Selling of commodities and equities has accelerated since
European Central Bank President Jean-Claude Trichet made comments on
Thursday that reinforced worries over sovereign default in the euro
zone. [ID:nECBNEWS]

“Sentiment in the market has really turned,” said Sterling
Smith, an analyst for Country Hedging Inc in St. Paul, Minnesota.

“We’re looking for consolidation at best over the next week. The
bottom line is there is more reason for the bulls to keep their
hands in their pockets than there is for them to come in here and
really look to be buying this,” he said.

ALERT

Also weighing on metals are expectations that central banks and
governments around the world will drain liquidity from markets,
which have been fueled by some policy tightening in China and in
Britain. [ID:nLAC005629]

“Concerns over Chinese policy tightening, the potential for a
European sovereign default and uncertainty over U.S. policy have put
downward pressure on commodity prices even as near-term fundamentals
improve,” said Goldman Sachs in a note.

“Although prices will likely remain volatile, we believe
fundamentals will dominate, with a strong risk-reward trade-off for
fresh longs.”

Copper stocks in LME warehouses are more than double the levels
in the middle of July last year, but over the last couple of weeks
they have hovered around 540,000 tonnes.

Stocks of aluminum, used in transport and packaging, fell 7,900
tonnes to 4.58 million tonnes.

Aluminum (MAL3: ) ended at $1,980 a tonne from $2,045 a tonne on
Thursday, having earlier hit a two-month low of $1,967.50, while
zinc (MZN3: ) finished at $1,940 from $2,021, having earlier hit
$1,935, its lowest since early October.

Lead (MPB3: ) ended at $1,940 from $1,964.50, having dropped to a
five-month trough of $1,920.50, while nickel (MNI3: ) ended at $17,005
from $17,725, having dropped to $17,020, a level last seen on Dec.
18.

Tin (MSN3: ) ended at $15,350 from $16,150. In after-hours
business, it fell further to $15,050, matching a low dating back to
early December.

Metal Prices at 1923 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 285.25 -2.65 -0.92 334.65 -14.76
LME Alum 1980.00 -65.00 -3.18 2230.00 -11.21
LME Cu 6285.00 -105.00 -1.64 7375.00 -14.78
LME Lead 1967.00 2.50 +0.13 2432.00 -19.12
LME Nickel 17100.00 -625.00 -3.53 18525.00 -7.69
LME Tin 15050.00 -1550.00 -9.34 16950.00 -11.21
LME Zinc 1955.00 -66.00 -3.27 2560.00 -23.63
SHFE Alu 16115.00 -235.00 -1.44 17160.00 -6.09
SHFE Cu* 51950.00 -2070.00 -3.83 59900.00 -13.27
SHFE Zin 16980.00 -520.00 -2.97 21195.00 -19.89
** 1st contract month for COMEX copper * 3rd contract month for
SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Stock Investing

(Additional reporting by Maytaal Angel in London; Editing by Keiron
Henderson/Marguerita Choy)

METALS-Copper hits 3-month low, recovery doubts dominate