By Chris Kelly
NEW YORK, Sept 2 (Reuters) - U.S. copper futures closed lower on Tuesday, after touching their lowest levels in seven months, as a sharp sell-off in crude oil triggered a wave of liquidation in the broader commodity complex, analysts said.
* Copper for December delivery HGZ8 shed 11.40 cents to close at $3.2730 a lb on the New York Mercantile Exchange's COMEX division.
* Range ran from an overnight peak at $3.3830 to $3.1590, the contract's lowest price since Jan. 28.
* Spot September HGU8 finished down 10.70 cents at $3.3225.
* By 1 p.m. EDT (1700 GMT), COMEX estimated futures volume at 18,355 lots. Final volume on Friday totaled 10,628 lots.
* Open interest in the market fell by 853 lots to 77,728 contracts open as of Aug. 29.
* Copper caught up in a widespread sell-off in commodities, triggered by a sharply weaker tone in the energy markets and a rallying U.S. dollar, analysts said.
* "Copper is just getting dragged down by a lot of outside market forces ... especially the size of the move in crude oil." - Rob Kurzatkowski futures analyst with OptionsXpress in Chicago.
* U.S. oil futures CLV8 settled below $110 a barrel as energy companies assessed damage and geared up to restart energy infrastructure shut ahead of Hurricane Gustav and as a resurgent dollar helped to pressure prices.
* Bearish technical momentum added to the aggressive liquidation in the red metal, with automatic sell-stop orders triggered below $3.35 (basis December) and at the Aug. 12 low at $3.21.
* "We did bounce back from session lows. We did break through $3.20 level, and the fact that we were able to hold it is somewhat encouraging for the market. Even though we had this sharp drop today, the momentum indicators are relatively flat." - Kurzatkowski.
* Fundamentally, copper's upside price potential hindered by uncertain near-term demand prospects, highlighted by another surge in London Metal Exchange copper warehouse stocks.
* LME copper stocks now stand at their highest levels since January, at 179,800 tonnes, up by 64 percent since this year's low in May.
* COMEX copper stocks stood even at 5,390 short tons on Friday.
* On the economic front, the Institute for Supply Management said its index of national factory activity edged down to 49.9 in August from 50.0 in July. Economists had expected an unchanged reading of 50.0. The prices paid index fell to 77.0 from 88.5.
* The net short position held by noncommercial investors grew to 11,052 lots in the week ended Aug. 29, compared with a net short of 9,127 lots the previous week.
* International Copper and Study Group data showed the market narrowed to a 155,000-tonne deficit in January to May, from a 238,000-tonne deficit last year.
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