LONDON Copper fell on Friday, on course for the fourth weekly drop, pressured by concerns about demand from top consumer China and as better-than-expected U.S. labor market data pushed the dollar higher.
U.S. employers stepped up hiring in October and the jobless rate ticked higher as more workers restarted job hunts, a hopeful sign for a lackluster economy.
Shortly after the data was released the dollar rose to a three-week high against the euro putting more pressure on already weaker base metals prices.
A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies. <FRX/>
Three-month copper on the London Metal Exchange closed at $7,665.50 a tonne in official rings, down 2 percent from Thursday's close of $7,826 a tonne.
Despite the positive labor market data, recent economic figures continue to point to fragile growth in the global economy, raising uncertainty about the outlook for industrial metal demand.
In the euro zone, manufacturing shrank for the 15th month running in October as output and new orders fell, a survey showed on Friday, likely fuelling expectations of further easing from the European Central Bank.
"I still think there is a lot to be concerned about. We have seen quite a significant retrenchment in industrial metals prices over the last six weeks and I think that could have further to run over the remainder of the year," said Ross Strachan, economist at Capital Economics.
"In China... we are still seeing very high stock levels at the moment especially in copper and aluminum. So even if there is an upturn in end-use demand, I don't think that is going to feed through immediately into additional units of metal demand."
Copper prices rallied nearly 8 percent in September, fuelled by the third round of quantitative easing (QE) by the U.S. Federal Reserve, the promise of bond buying by the European Central Bank (ECB) and stimulus measures in Japan and China.
The metal then weakened in October, falling more than 5 percent, as expectations that real demand for metals would improve failed to materialize.
In China, the world's largest consumer of copper, concerns remained about the outlook for demand which has remained sluggish this year.
"Overall, investors are bearish about copper due to weak physical demand in China, which many thought should have improved by now," said a Shanghai-based trader.
"While we may see prices inch down gradually in the near term, I doubt we will see a deep plunge this year since the economic data out of China and the U.S. have been encouraging."
In industry news, Japan Pan Pacific Copper (5020.T) sold 120,000 tonnes of copper to China under a 2013 term contract at $85 premium, sources said.
In other metals, nickel closed at $15,970, from Thursday's close of $16,350.
Aluminum finished at $1,925 a tonne from Thursday's close of $1,940.
"Prices could see another $10-15 on the upside, but we would recommend selling into strength given the market's creaky fundamentals," ANZ said in a note.
Lead ended at $2,095 from $2,126.50, tin at $20,160 from $20,375 and zinc at $1,874 from Thursday's close of $1,889.
(Additional reporting by Carrie Ho in Shanghai; Editing by Jason Neely)