Sept. 7 (Bloomberg) -- Copper, zinc and nickel led declines on the London Metal Exchange after the U.S. economy unexpectedly lost jobs in August for the first time in four years, stoking speculation demand growth for metals may slow.

Employers cut 4,000 workers, compared with a revised gain of 68,000 in July, the Labor Department said today. That triggered declines in stock markets and industrial metals. The UBS Bloomberg CMCI Industrial Metals three-month total return index fell as much as 2.1 percent to the lowest since Aug. 17.

The jobs data ``provide one sign that problems are starting to spread from the subprime-mortgage market to the rest of the economy,'' Sempra Metals Ltd. analyst, John Kemp, said in a report. Sempra is one of 11 companies trading on the LME floor.

Copper for delivery in three months fell $160, or 2.2 percent, to $7,140 a metric ton as of 4:37 p.m. local time. That's a 4.2 percent loss for the week. The contract earlier dropped to $7,085 a ton, the lowest intraday since Aug. 22. Zinc declined $65, or 2.3 percent, to $2,760 a ton, heading for an 11 percent weekly loss.

The Standard & Poor's 500 Index lost as much as 1.8 percent as of 11:51 a.m. in New York. BHP Billiton Ltd., the world's largest mining company, declined as much as 3.1 percent to 1,428 pounds in London trade. Anglo American Plc, the world's the second-biggest miner, lost 4.9 percent.

``The impacts are in the market sentiment more than physical demand for metals,'' said Kona Haque, an analyst at Economist Intelligence Unit in London. ``It's demand from China and other emerging countries that have driven prices. I expect demand from China to remain strong.''

Copper Stockpiles

Copper stockpiles monitored by the LME were unchanged at 137,775 tons, the exchange said today. Of the total, 86,300 tons, or 60 percent, are in Singapore and South Korea, which are locations mostly used by China.

Inventories tracked by the Shanghai Futures Exchange fell 3,204 tons, or 4.8 percent, to 63,589 tons from a week ago, according to the exchange's Web site today.

Copper stockpiles in warehouses tracked by exchanges in London, Shanghai and New York are equal to about 4.7 days of global demand, compared with an average of about 5 days over the last 12 months, according to Bloomberg calculations.

Aluminum dropped $23 to $2,447 a ton, heading for a weekly loss of 0.9 percent. The contract fell to $2,420 a ton yesterday, the lowest intraday price since Sept. 20, 2006.

Inventories monitored by the LME are at 866,925 tons, the highest since July 2004. More supply has come from China, the world's largest producer of the metal.

Aluminum Supply

Supply will outpace demand by 70,000 tons this year, Daniel Hynes, a metals strategist at Merrill Lynch & Co. in London, said in a report yesterday. He reduced his earlier forecast for a surplus of 300,000 tons.

China will become a net importer from 2010, Norsk Hydro ASA Chief Executive Officer Eivind Reiten said yesterday at a presentation in Oslo.

Nickel fell $225, or 0.8 percent, to $27,100 a ton and tin slipped $25 to $14,700. Lead declined $26 to $2,885 a ton.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: September 7, 2007 12:25 EDT