(Reuters) - Copper was slightly up on Friday after a drop in the U.S. jobless rate strengthened hopes of an economic improvement which could lead to higher metals demand, but fears of an interruption of looser monetary policies in the U.S. capped gains. Data showed the unemployment rate dropped in September to its lowest level since January 2009, even as Americans came back into the labor force to resume the hunt for work. Benchmark copper on the London Metal Exchange (LME) rose slightly after the data was released and was trading at $8,337.75 a metric tonne by 1323 GMT from a close of $8,305 on Friday. The metal, widely used in power and construction, was on track for a 1.5 percent increase this week, and it has gained almost 10 percent in the past month, helped by actions by central banks in the U.S., Europe and Japan to loosen their monetary policy in an attempt to boost growth. Some however feared that signs of an improving economy would push central banks to interrupt their stimulus programs. "The data is very positive but copper is stuck between the good employment news on the one side and the fact that an economic improvement could lead to a revision of the looser monetary policies already in October," said T-Commodity consultant Gianclaudio Torlizzi. "There is no doubt that copper has soared in the last two weeks purely because of the 'free money' but there are no signs of a demand improvement from China." Sluggish metals demand from top buyer China, which makes up for 40 percent of the global copper demand, kept a lid on the rally seen in the last few weeks. Helping metals, the euro hit a 2-week high against the dollar as risk sentiment improved following the U.S. jobs report. The single currency had started to rise on Thursday after ECB President Mario Draghi said that everything was in place for the bank to buy the bonds of troubled euro zone countries such as Spain and that conditions linked to it need not be punitive. A stronger euro makes dollar-priced metals cheaper for European and other non-U.S. investors. Taking some shine off global growth prospects though, a German newspaper report said the International Monetary Fund would lower its forecasts for global economic growth to 3.3 percent this year and 3.6 percent in 2013 from earlier forecasts of 3.4 percent and 3.9 percent. CHINESE DIET Trading volumes were low this week as a holiday in China kept a large number of players away from the market. China's appetite for metals however may be muted even when it returns to the market on Monday given prices are $100 higher this week, a trader in Singapore said, with a U.S. holiday on Monday also likely to keep trading quiet. In other metals, aluminum, used in packaging and car making, traded up at $2,116.50 a tonne from $2,112 at the close on Thursday. Aluminum premiums - money paid over the benchmark LME cash price to secure immediate delivery of physical metal - have been on a steady uptrend since the beginning of the year. "Inventory financing and cancelled warrants are driving aluminum premiums higher by lengthening the queue to obtain aluminum from LME warehouses," Commonwealth Bank said in a research note. "We expect inventory financing to keep aluminum premiums rising and suspect that smelters that appear uneconomical on an LME aluminum cash level are remaining afloat by claiming some part of the premium in their pricing." Tin traded at $22,550 from $22,500 Thursday's close while zinc, used to galvanize steel, was at $2,070 from $2,065. (Additional reporting by Melanie Burton in Singapore; editing by Keiron Henderson)

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