By Millie Munshi Jan. 8 (Bloomberg) -- Copper prices fell in New York on concern that demand may drop as a 10 percent jobless rate in the U.S. limits an economic recovery. U.S. employers cut 85,000 jobs last month, the Labor Department reported. The unexpected reduction may signal a cooling expansion, analysts said. The metal also fell on concern that demand may diminish in China, where the central bank is taking steps to rein in credit. The U.S. is the second-biggest metals user after China. “The outlook for jobs is still so bad,” said Gijsbert Groenewegen, a Gold Arrow Capital Management partner in New York. “People had a lot of confidence in a recovery, but the news coming out shows we don’t really have that.” Copper futures for March delivery dropped 2.65 cents, or 0.8 percent, to $3.4005 a pound on the Comex division of the New York Mercantile Exchange. The drop pared the most-active contract’s increase for the week to 1.6 percent, the fourth straight advance. Prices fluctuated between gains and losses today as traders weighed the weakening U.S. employment outlook against a declining dollar, said Frank McGhee, the head metals dealer at Integrated Brokerage Services LLC in Chicago. Some traders buy commodities when the U.S. currency weakens, to protect purchasing power. The dollar fell as much as 0.7 percent today against a basket of six major currencies. While the dollar slid 4.2 percent last year, copper more than doubled as China’s rising demand and an improving outlook for the global economy buoyed prospects for metal use. On the London Metal Exchange, copper for delivery in three months fell $74, or 1 percent, to $7,461 a metric ton ($3.38 a pound). Nickel, lead, tin, zinc and aluminum fell. To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.

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