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Copper was down nearly one percent on the London Metal Exchange (LME) on Friday ahead of U.S. payrolls data and on concerns about a slowing U.S. economy, analysts said.

"In 2007, most of us expects the economic headwinds to get worse -- not better," analyst Nick Moore at ABN AMRO said.

A string of weak U.S. economic data has traders eyeing falling demand for base metals such as copper, with many investors now bracing for the Federal Reserve to cut interest rates from 5.25 percent as many as three times next year to try to bolster growth.

U.S. non-farm payrolls data for November due at 1330 GMT is in focus, giving clues about the state of the U.S. economy.

"The payroll numbers are absolutely crucial," Moore said, adding that if the financial investor -- who has been driving the commodities prices higher -- is influenced more by the macro environment than by fundamentals then prices will go lower from here.

Copper for delivery in three months was quoted at $6,845/6,846 a tonne in the open outcry trading session, against $6,890 on Thursday when it hit a two-week low at $6,806.

LME-monitored copper stocks have steadily swelled to around 166,000 tonnes, the highest level seen in two years, from little more than 25,000 tonnes in July last year, dampening sentiment.

BHP Billiton, the world's biggest miner, said its Spence copper mine in Chile produced its first cathode this week, about three weeks ahead of schedule.

"There is a convoy of copper mines due on stream," Moore said and forecast the copper price to fall in 2007 and 2008.

Mining stocks on the London Stock Exchange were found among the top ten losers, down around one to four percent after Merrill Lynch cut its rating on the sector to neutral.

"Sector downgrade is based on concerns about the impact of a slowing global economy in 2007 on metals consumption and our view this will impact stock performance in Q1/Q2.," Merrill said in a note.

But the metal prices would be underpinned short-term by potential supply disruptions, analyst William Adams at BaseMetals.com said in a note.

"Given the... supply disruptions from labour renegotiations at Codelco's Norte Division, Xstrata's Altonorte smelter and at BHP Billiton's Cerro Colerado mine, as well as the maintenance shutdowns at Collahuasi, there is a lot of risk potential."

Zinc fell to $4,268, down 0.5 percent. On Thursday, zinc slipped more than 3 percent to a two-week low of $4,240 as stocks at LME warehouses rose for the third consecutive day.

Together with nickel, zinc has been the best performer this year on the LME -- and they could, together with lead, continue to outperform copper and aluminium, JP Morgan said in a report.

Lead firmed to $1,731 from $1,708, supported by falling inventories, down to the lowest level this year at 39,400 tonnes.

Aluminium was lower at $2,815 against $2,820.

The metal has to close above $2,830 in order for it to break higher, an LME floor trader said.

"Aluminium looks good on the charts... people talk about it going up to $3,000 ahead of New Year...funds keep pushing it."

Aluminum returned to trade in backwardation, at a premium of $7/11 to the benchmark futures contract after trading at a discount - contango - of $8/6 in the previous session.

Tin was trading at $10,925, up against its last quote at $10,725/10,750 on Thursday.