Copper drifts lower as dollar broadly strengthens
* U.S. jobs, ECB rate verdict watched by wary investors

A firmer dollar caused copper to ease on Thursday, after the metal hit two-week highs in the previous session, and investors were looking to key U.S. jobs data to provide further direction.

Copper surged on Wednesday to $5,187.50 a tonne -- its highest level in more than two weeks – driven by upbeat manufacturing surveys in the United States, Europe and China.

The economic calendar will again be closely watched later, with U.S. jobs data, ahead of the Independence Day holiday on Friday, and an interest rate decision from the European Central Bank that could have an impact on currencies and commodities.

By 0938 GMT, copper for three month delivery on the London Metal Exchange fell to $5,037.50 a tonne from $5,090 at the close on Wednesday and compared with a session low at $5,025.

"It's the non-farm payrolls," said Robin Bhar, senior metals analyst at Calyon. "That is going to be influential one way or the other, in a sense that people will take tomorrow off (and) markets will be dead."

"It should be an OK number in the sense that this week, we've had some constructive data ... there is a sense that the data is getting better but still room for improvement."

A weaker dollar has aided base metal prices in recent weeks, but the U.S. currency edged up from close to three-week lows on Thursday. A strong U.S. currency makes metals priced in dollars more expensive for holders of other currencies.

Prices of the red metal, used in power and construction, have gained about 60 percent this year, boosted by Chinese stockpiling.

Buying from China appears to be fading, however, and combined with the quiet summer lull period, analysts see base metal price weakness in the coming months. Copper stocks will be closely scrutinised. On Thursday they fell 1,500 tonnes to 264,225 tonnes -- the lowest level since November.

ALUMINIUM DIPS

Aluminium fell $5 to a $1,658. LME inventories of the metal, used in transport and packaging, remain at near record levels of above 4.3 million tonnes.

Aluminium gained about 16 percent in the second quarter as Chinese buying and a shortage of the metal in the near term buoyed prices.

But idled smelters re-starting and continued weak economic conditions could hinder prices, analysts said.

"There has been a fair bit of talk about China and the global recovery," said Chris Powell, head of commodities at ETX Capital. "People get carried away with better numbers -- of course they will be better than diabolical (data) we had in the last quarter of last year."

"You are going to see a sideways move over the next two months and then once the sun goes in, people stop spending and realism kicks in, you will see a downward trend."

Steel making ingredient nickel traded at $16,275 from $16,450 while battery material lead was at $1,725 from $1,739.

Investors will closely watch developments from BHP Billiton Ltd which, for the second time in less than a month, temporarily closed its Perseverance nickel mine in west Australia due to rock falls.

Zinc dropped to $1,572 a tonne from $1,595 and tin edged lower to $14,400 from $14,500.

Worries about nearby tin supplies have pushed the premium for cash material over the three-month contract to around $68 a tonne from a discount of around $40 a tonne mid-June.

Earlier, the LME experienced technical problems with its price updates.

Metal Prices at 0943 GMT Metal Last Change Percent Move End 2008 Ytd Percent

move COMEX Cu 228.75 -2.75 -1.19 139.50 63.98 LME Alum 1652.00 -11.00 -0.66 1535.00 7.62 LME Cu 5022.00 -68.00 -1.34 3060.00 64.12 LME Lead 1722.00 -17.00 -0.98 999.00 72.37 LME Nickel 16225.00 -225.00 -1.37 11700.00 38.68 LME Tin 14400.00 -350.00 -2.37 10700.00 34.58 LME Zinc 1568.00 -27.00 -1.69 1208.00 29.80 SHFE Alu 13465.00 45.00 +0.34 11540.00 16.68 SHFE Cu* 40190.00 -150.00 -0.37 23840.00 68.58 SHFE Zin 13400.00 0.00 +0.00 10120.00 32.41 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07