UPDATE 7-Weak global economy hits copper sentiment

(Updates with New York closing copper prices)

By Pratima Desai and Anna Stablum

LONDON, Jan 15 (Reuters) - Copper dropped more than 3 percent on Tuesday as
the market's focus returned to global economic slowdown and falling demand from
the United States and China, two of the world's biggest consumers of the
industrial metal.

Sluggish U.S. data hit both commodities and equities, reinforcing worries
that the U.S. economy may face recession.

"The macro concerns are coming back to the market again and most of the
commodities are down, and the stock market," analyst Edward Meir at MF Global
told Reuters.

Copper MCU3 for delivery in three months ended at $7,160 per tonne on the
London Metal Exchange, down 3.2 percent from Monday's close of $7,400. At one
point it fell by 3.7 percent.

At the New York Mercantile Exchange's COMEX division, copper for March
delivery HGH8 closed 9.75 cents lower or down 2.9 percent at $3.2415 a lb,
after dealing between $3.22 and $3.36.

Global equities slid as a report showing a surprise drop in retail sales in
December bolstered the market's suspicions of a recession, while a
bigger-than-expected loss at Citigroup Inc (C.N) dragged down the financial
sector.

"The Citigroup news saw stocks hit and all base metals got hit by CTA
(Commodity Trading Advisor) selling -- and they have not recovered at all," an
LME trader said.

The U.S. Commerce Department said retail sales dropped 0.4 percent last
month and it revised down November's sales gain to 1 percent from a previously
reported 1.2 percent.

"The retail sales figure was pretty bad ... given it was a December number
we could have seen a bit of a bump with all the Christmas shopping," Meir said,
referring to expectations.

In London, mining firms Kazakhmys (KAZ.L) and Antofagasta (ANTO.L) were
among the 10 largest losers on the FTSE 100 index .FTSE down 4.95 percent and
4.89 percent, respectively.

"The bigger macro picture is still bearish and sentiment is poor," said
Michael Jansen, analyst at JP Morgan.

The problem for copper, widely used in the power and construction
industries, is growing talk of recession in the United States, which uses about
15 percent of world output.

DWINDLING INTEREST

The copper market shrugged off stocks in LME warehouses which fell by 4,500
tonnes to 194,100 tonnes because the actual amount available -- on warrant --
to the market rose 425 tonnes to 166,725 tonnes.

Traders said investment buying which had helped copper gain nearly 9
percent between Jan. 2 and Monday had petered out.

They said the bearish mood was more pervasive in the physical market and
can be seen in the fact that all metals are in contango -- where cash prices
are lower than those for the three-month futures contract.

Zinc MZN3 prices fell to a four-week low of $2,295 a tonne, down 4.2
percent, on worries that a Chinese government tax of 5 percent on exports of
some galvanised steel products could cut demand.

Rising stocks of zinc were also weighing on prices. LME stocks rose 3,125
tonnes to 97,250 tonnes, a gain of more than 9 percent since the end of
December last year.

Zinc closed at $2,300 a tonne from $2,396 on Monday.

Aluminium MAL3 fell $65 to $2,483 a tonne, lead MPB3 dropped 2.9
percent to $2,655, tin MSN3 was at $16,215 from $16,425/16,450 and nickel
MNI3 ended at $28,400 from $29,300.
METAL PRICES BY 1837 GMT
Metal Last Change Pct Move End 2007 Ytd Pct

move
LME Cu 7145.00 -255.00 -3.45 6670.00 7.12
SHFE Cu* 60920.00 -1410.00 -2.26 56880.00 7.10
LME Alum 2480.00 -68.00 -2.67 2403.00 3.20
SHFE Alu* 18400.00 -40.00 -0.22 18180.00 1.21
COMEX Cu** 322.00 -9.70 -2.92 303.05 5.88
LME Zinc 2300.00 -96.00 -4.01 2370.00 -2.95
SHFE Zinc* 19400.00 -705.00 -3.51 18950.00 2.37
LME Nick 28350.00 -950.00 -3.24 26350.00 7.59
LME Lead 2642.00 -93.00 -3.40 2550.00 3.61
LME Tin 16225.00 -75.00 -0.46 16400.00 -1.07
** 1st contract month for COMEX copper
* 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Chris Kelly in New York, editing by Matthew Lewis)