MARKETS-METALS (UPDATE 4) * Sovereign default worries escalate * Dollar hits seven-month high against basket * Market on alert for U.S. jobs data (Recasts, adds comment/details, pvs Singapore) By Pratima Desai LONDON, Feb 5 (Reuters) - Copper crashed to its lowest in more than three months on Friday, hammered by dollar strength, renewed fears about the health of the global economy and sovereign default. Aluminium slid to a two-month low of $1,991 a tonne, and zinc to $1,985, its lowest since the middle of October. Lead dropped to $1,935, a five month trough, and nickel to $17,130, a level last seen on December 18. Benchmark copper tumbled to $6,225 a tonne, its lowest since October 19. The metals used in power and construction was trading at $6,260 a tonne at 1122 GMT from $6,390 at the close on Thursday. Investor selling of commodities and equities accelerated after European Central Bank President Jean-Claude Trichet's comments on Thursday reinforced worries about the indebtedness of a number of economies in the euro zone. "Losses have been driven by risk aversion, you have the dollar quite strong and there are a lot of concerns about debt conditions in Europe and potentially elsewhere," said Dan Brebner, analyst at UBS. "There was a significant amount of confidence in the U.S. economy. Investors are questioning that ... There's an element of panic behind the selling." The dollar hit a 7-month high against a currency basket as a widening in euro zone government bond spreads against benchmark German government bonds highlighted escalating worries about sovereign default. Traders say data from the United States has been mixed in recent weeks and that up until last week, the tendency had been only to respond to the positive numbers. But focus has shifted and the market is on alert for key monthly jobs data from the United States, the world's largest economy, later on Friday. Expectations that central banks and governments around the world will drain liquidity from markets, have been fuelled by some policy tightening in China and in Britain. Copper prices have fallen about 25 percent since the 2010 high of $7,796 hit on January 7. "While we believe this recent price weakness is creating an opportunity, we would look for a floor to be established before buying emerges," Barclays Capital said in a note. "Despite overriding concerns about monetary tightening, signals from the metals markets are increasingly encouraging ... Deliveries into LME warehouses have started to slow for a number of metals ... anecdotal reports are encouraging." Copper stocks in LME warehouses are more than double the levels in the middle of July last year, but over the last couple of weeks they have hovered around 540,000 tonnes. Stocks of aluminium, used in transport and packaging, fell 7,900 tonnes to 4.58 million tonnes. Aluminium was trading at $2,002 a tonne from $2,045 a tonne on Thursday, zinc at $2,012 from $2,021, lead at $1,945 from $1,964.50, tin at $15,775 from $16,150 and nickel at $17,350 from $17,725. Metal Prices at 1119 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 282.60 -5.30 -1.84 334.65 -15.55 LME Alum 1995.00 -50.00 -2.44 2230.00 -10.54 LME Cu 6240.00 -150.00 -2.35 7375.00 -15.39 LME Lead 1935.00 -29.50 -1.50 2432.00 -20.44 LME Nickel 17300.00 -425.00 -2.40 18525.00 -6.61 LME Tin 15725.00 -875.00 -5.27 16950.00 -7.23 LME Zinc 1999.00 -22.00 -1.09 2560.00 -21.91 SHFE Alu 16115.00 -235.00 -1.44 17160.00 -6.09 SHFE Cu* 51950.00 -2070.00 -3.83 59900.00 -13.27 SHFE Zin 16980.00 -520.00 -2.97 21195.00 -19.89 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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