MARKETS-METALS (UPDATE 5)
* U.S. jobless claims fell unexpectedly last week
* Dollar recovers, weighs on base metals
* Coming Up: U.S. Non-farm payrolls on Friday
(Recasts, adds comment)
By Marie-Louise Gumuchian
LONDON, Oct 7 (Reuters) - Copper tumbled on Thursday as the dollar recovered against the euro in a move that coincided with a World Bank warning currency tensions could lead to trouble.
The metal used in power and construction hit $8,326 a tonne on Wednesday, its highest since July 2008 on expectations the U.S. Federal Reserve will print more money to help boost growth in the United States, the world's largest economy.
Benchmark copper on the London Metal Exchange was trading at $8,155 a tonne at 1412 GMT compared with $8,259 at Wednesday's close.
The dollar recovered after World Bank President Robert Zoellick said if currency tension slides into conflict there was a risk of repeating mistakes of the 1930s.
Industrial metals markets immediately latched onto the idea of a depression such as that seen in the 1930s and started fretting about demand prospects. For a Take-A-Look on global currency tensions click on
"People are expecting a correction," said Andrey Kryuchenkov, analyst at VTB Capital. "Fundamentally copper is strong, it is becoming scarcer ... Overall though the dollar is weaker and that has been behind the rise in base metals."
Copper has risen nearly 40 percent since hitting an eight-month low in June this year, at the forefront of a rise in metals prices which saw tin on Wednesday hit a record high.
"(Copper) is looking a little bit tired. It's done a lot in a very short space of time and there are risks now, said David Thurtell, an analyst at Citigroup.
Overall the dollar's downtrend over the last month has been a source of strong support for commodities. A weaker U.S. currency makes commodities priced in dollars cheaper for holders of other currencies.
Focus will now shift to two key events on Friday -- the return of Chinese players after a week-long holiday and U.S. non-farm payrolls data for September.
TIGHTENING MARKET
The copper market has been tightening for many months, with stocks in LME warehouses tumbling more than 30 percent since the middle of February.
Thursday's data showed LME stocks down 675 tonnes to 373,450 tonnes, the lowest since October 2009.
Among other metals, tin was trading at $26,200 versus Wednesday's close at $26,300, short of the previous session's record peak at $26,790, underpinned by tight supply from top exporter Indonesia and low stocks.
The Association of Indonesia's Tin Industry said the country's monthly tin exports could slip below 7,000 tonnes until March, because of heavy rain and depleting reserves.
Traders are also watching tin supplies due to a single entity controlling 30-40 percent of LME stock warrants and cash contracts.
Fears of supply shortages are the main reason behind the small premium for cash material over the three-month contract -- at around $10 a tonne on Thursday -- compared with a discount above $30 a tonne in early September.
"With little sign that supply will increase dramatically over the short term, tin looks set to have a very strong quarter ahead," Standard Bank said in a note.
Stainless steel material nickel was at $24,270 a tonne from Wednesday's close of $24,800, while lead was at $2,255 a tonne versus $2,316. Zinc was trading $2,285 a tonne versus Wednesday's close of $2,334.
Aluminium was trading at $2,352 a tonne from $2,365 at the close on Wednesday.
For story on copper technicals:
Metal Prices at 1411 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 370.55 -4.45 -1.19 334.65 10.73 LME Alum 2375.00 10.00 +0.42 2230.00 6.50 LME Cu 0.00 -8259.00 -100.00 7375.00 -100.00 LME Lead 2251.00 -65.00 -2.81 2432.00 -7.44 LME Nickel 24725.00 -75.00 -0.30 18525.00 33.47 LME Tin 26445.00 145.00 +0.55 16950.00 56.02 LME Zinc 0.00 -2334.00 -100.00 2560.00 -100.00 SHFE Alu 15870.00 -80.00 -0.50 17160.00 -7.52 SHFE Cu* 60600.00 -190.00 -0.31 59900.00 1.17 SHFE Zin 17875.00 -75.00 -0.42 21195.00 -15.66 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
