Aug. 5 (Bloomberg) –Copper futures fell the most in 10 weeks on signs that the global economic recovery is stalling, damping the outlook for commodity demand.

The MSCI All-Country World Index, a measure of global equities, has dropped more than 10 percent from this year's high in May. U.S. initial jobless claims fell last week to a level indicating limited improvement in the labor market. The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell, erasing this year's gain.

"Sentiment has taken its turn for the worse," Gayle Berry, an analyst at Barclays Capital in London, said in a telephone interview. "The markets are worried about what the implications of fiscal austerity mean for the trajectory of economic growth, and therefore for metal demand."

Copper futures for September delivery declined 9.05 cents, or 2.1 percent, to close at $4.2355 a pound at 1:17 p.m. the Comex in New York, the biggest decline since May 23. Earlier, the price touched $4.226, the lowest for a most-active contract since June 30.

The metal fell for the fourth straight day, the longest slump since June. Copper has dropped 4.8 percent this year.

Service industries in the U.S., the largest part of the nation's economy, expanded in July at the slowest rate in 17 months, a report showed yesterday. European services and manufacturing growth eased last month to the slowest pace in almost two years.

"The market is in the process of discounting a higher probability of a significant slowdown in the world economy," Jesper Dannesboe, a strategist at Societe Generale in London, said in a report. "It is very hard to see how copper can totally ignore this."

On the London Metal Exchange, copper for delivery in three months fell $180, or 1.9 percent, to $9,355 a metric ton ($4.24 a pound).

Aluminum, nickel, zinc, tin and lead also fell in London.