* U.S. economic data paints bleak demand picture

* Oil rebounds to $126 a barrel, dollar nearly unchanged

* Lead down 4.3 pct on stocks, tin 3.2 pct on profit-taking
(Updates with New York closing copper prices, adds analyst
comments)

By David Sheppard and Anna Stablum

LONDON, Aug 1 (Reuters) - Copper prices fell 2 percent on
Friday as a flurry of economic data from the United States still
pointed to a severe slowdown and investors worried about metals
demand.

Metal prices shrugged off the rebound in oil, which together
with a firmer dollar had capped prices earlier in the session as
many index-based funds buy or sell commodity baskets.

"The U.S. is on the verge of recession which is negative for
all metals because they are so closely linked to the economic
performance," analyst Eugen Weinberg at Commerzbank said.

London Metal Exchange copper MCU3 -- often seen as a key
gauge for real economic activity -- closed at $7,900 a tonne from
$8,060 at Thursday's close.

"The metals will stay in a downward trend -- there is great
potential for copper to go down further if we close below $8,000
per tonne," Weinberg said.

Copper for September delivery HGU8 slipped 8.30 cents to
close at $3.5785 a lb on the the New York Mercantile Exchange's
COMEX division.

"All of this pressure we are seeing in this market is coming
from the slowing growth story and the concerns in the market about
a recession in the United States," said Ralph Preston, futures
analyst with HeritageWestFutures.com in San Diego, California.

Lead MPB3 touched an intra-day low of $2,115 a tonne, down
4.3 percent, after a rise in LME stocks encouraged some investors
to book profits following strong gains over the past month. Lead
is up by 45 percent since the metal, mainly used in batteries,
touched this year's low at $1,531 on July 4.

Lead was last at $2,126 a tonne from $2,210 on Thursday.

Stocks at LME warehouses increased by 1,250 tonnes to 92,250,
having fallen by almost 9 percent in July.

Tin MSN3 hit $21,500, down 3.2 percent, before ending at
$21,500/21,550 down against $22,200 on Thursday.

Traders said investors were taking home profits with the metal
gaining 32 percent this year -- the best LME performer.

"The metal has faced some downward pressure after trading
below $22,000, but it should stay well supported above $20,000,"
Commerzbank's Weinberg said.

THE U.S. IN TROUBLE

The U.S. unemployment rate climbed to 5.7 percent in July, its
highest in more than four years as employers cut payrolls for a
seventh month in a row, though less severely than predicted,
according to a government report.[ID:nN01436078]

"The economy has not created enough jobs to match demand since
the onset of the banking crisis 12 months ago," said economist
John Kemp at RBS Sempra in a research note.

Rising prices of motor fuels and other cost increases should
lead to a further slowdown in consumer spending in the second half
of 2008 and lasting into the first half of 2009 unless there is a
substantial reduction in oil prices, he said.

"The economy looks set to slow further over the next 6-12
months."

U.S. factory activity was unchanged in July from June while
inflation pressures moderated, according to a report.

The Institute for Supply Management said its index of national
factory activity edged lower in July to 50.0 from 50.2 in June.
[ID:nN01362104]

Earlier in the session a firm dollar EUR= dampened sentiment
by making dollar-priced metals more expensive for holders of other
currencies, but later it trimmed gains.

Negative sentiment in commodity markets over the past month
can be seen in the performance of indices such as the S&P GSCI
.SPGSCITR and the Reuters-Jeffries CRB Index .
[ID:nL03787750]

Aluminium MAL3 tracked copper lower and the metal used in
packaging, construction and transport, traded at $2,934 a tonne
from $2,980 on Thursday.

China is considering imposing a 5 percent tax on exports of
unwrought aluminium alloy as early as in September to reduce
exports of the metal [ID:nHKG238308]

Zinc MZN3 last traded at $1,840 a tonne from Thursday's last
bid at $1,915 and nickel MNI3 was at $18,300 from $18,350.

Metal Prices at 1600 GMT Metal Last Change
Pct Move End 2007 Ytd Pct

move
LME Cu 7900.00 -160.00 -1.99 6670.00 18.44
SHFE Cu* 61440.00 -330.00 -0.53 56880.00 8.02
LME Alum 2927.00 -53.00 -1.78 2403.00 21.81
SHFE Alu* 18960.00 -175.00 -0.91 18180.00 4.29
COMEX Cu** 362.85 -8.80 -2.37 303.05 19.73
LME Zinc 1835.00 -80.00 -4.18 2370.00 -22.57
SHFE Zinc* 15255.00 -325.00 -2.09 18950.00 -19.50
LME Nick 18350.00 0.00 +0.00 26350.00 -30.36
LME Lead 2120.00 -90.00 -4.07 2550.00 -16.86
LME Tin 21500.00 -700.00 -3.15 16400.00 31.10
** 1st contract month for COMEX copper
* 3rd contact month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Chris Kelly in New York; editing by Jim
Marshall)