METALS-Copper ends off 4-month high on weak services data

* US payrolls fall by less than expected, supports copper

* ISM index disappoints, weighs on copper

* Falling copper stocks boost prices

* Coming up: US holiday on Mon, Fed Beige Book on Wed
(Recasts, updates prices, market activity to New York close, adds second
byline, dateline, previously LONDON)

By Selam Gebrekidan and Michael Taylor

NEW YORK/ LONDON, Sept 3 (Reuters) - U.S. copper finished with slight gains
on Friday, coming down off four-month highs as tepid U.S. service sector data
cooled a market that had jumped on employment data that was not as weak as many
had feared.

Benchmark copper for three-month delivery CMCU3 on the London Metal
Exchange ended at $7,640 a tonne, up from $7,635 on Thursday but well off the
session high of $7,750, its highest since late April.

Copper for December delivery HGZ0 finished up 0.45 cents, or 0.13
percent, at $3.50 per lb on the COMEX metals division of the New York
Mercantile Exchange.

Copper came off highs when some participants trimmed positions ahead of a
long U.S. holiday weekend. COMEX will be closed for the Labor Day holiday on
Monday Sept. 6.

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For a graphic on payrolls click:

link.reuters.com/fym39n

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Copper prices got an early boost from a report that U.S. non-farm payrolls
fell 54,000 in August, much less severe than the 100,000 job losses analysts
had forecast. Also, there were 123,000 fewer jobs lost in June and July than
previously reported. [ID:nN02227856]

But the rally fizzled when data showed the Institute for Supply
Management's index measuring U.S. non-manufacturing sector grew less than
expected in August. Wall Street stock indexes eased off session highs, and
copper followed suit.

"Equity prices came off their gains after ISM data and copper followed
since it has been linked to stocks for a while," said Peter Buchanan,
commodities analyst and senior economist at CIBC in Toronto.

Buchanan said copper investors have been encouraged lately by reports
showing the housing market, for which copper is a main input, does not have
much further to fall.

"The economy is certainly not strong, but data showed it wasn't as bad as
expected. And with the pending home sales data from this week and the Chinese
PMI number, these reports allayed fears of a double-dip recession," he said.

Wall Street was set to have its best week in six, on the stronger-than
expected labor market report. [.N]

The U.S dollar fell against the euro as economic reports boosted appetite
for riskier assets, also supporting copper prices. [.DXY]

Latest LME data showed copper stocks extended falls, slipping 1,800 tonnes
to 397,675 tonnes. They are down from 6-1/2 year highs at 555,075 tonnes in
mid-February.

In China, copper inventories in warehouses monitored by the Shanghai
Futures Exchange fell 4 percent from a week earlier, the exchange said.
[ID:nTST000404]

"Copper has further upside potential despite the economic slowdown. When we
came out of recession a lot of consumers postponed purchases and drew down
onsite inventories, now they need to get back to the market," said Credit
Suisse analyst Tobias Merath.

Among other metals, aluminium CMAL3, used in transport and packaging,
ended at $2,148 a tonne from $2.145 a tonne Thursday. The metal earlier touched
$2,176.75 a tonne, its highest since Aug. 11.

Aluminium stocks eased 5,375 tonnes to remain near record levels above 4.4
million tonnes. A large portion of those aluminium stocks are tied up in
finance deals. [ID:nGEE5BA277]

Battery material lead CMPB3 ended at $2,168 a tonne from $2,155 a tonne
Thursday, having earlier hit its best level since Aug 10 at $2,196 a tonne
while stainless steel-making ingredient nickel CMNI3 ended at $21,600 a tonne
from $21,650 a tonne.

Nickel earlier hit $22,125 a tonne, a peak not seen since Aug. 19, as
analysts cited a combination of fund buying and rising demand from Chinese
steel mills.

Zinc CMZN3 ended at $2,152 a tonne from $2,174 and tin CMSN3 ended at
$21,200 a tonne from $21,425.

Metal Prices at 3:27 p.m. EDT (1927 GMT)
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 350.20 1.15 +0.33 334.65 4.65
LME Alum 2145.00 0.00 +0.00 2230.00 -3.81
LME Cu 7685.00 50.00 +0.65 7375.00 4.20
LME Lead 2180.00 25.00 +1.16 2432.00 -10.36
LME Nickel 21725.00 75.00 +0.35 18525.00 17.27
LME Tin 21200.00 -225.00 -1.05 16950.00 25.07
LME Zinc 2160.00 -14.00 -0.64 2560.00 -15.63
SHFE Alu 15570.00 30.00 +0.19 17160.00 -9.27
SHFE Cu* 59880.00 -40.00 -0.07 59900.00 -0.03
SHFE Zin 17620.00 -65.00 -0.37 21195.00 -16.87
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Maytaal Angel; Editing by David Gregorio)