* Fresh sell-off on stock markets hurts cyclical assets
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl
* LME/ShFE arb: (Updates throughout, adds LONDON dateline)
By Jan Harvey
LONDON, Feb 9 (Reuters) - Copper fell on Friday and other metals broadly retreated as stock markets extended this week's sharp slide, with the prospect of rising U.S. interest rates denting hopes that surging economic growth would drive up demand.
Consequent selling of cyclical assets sent copper to an eight-week low at $6,784.50 and put it on track to fall 3.5 percent this week, its biggest weekly drop in two months.
A jump in inventories of the red metal, chiefly used in construction, is also weighing on prices.
"(Metals) have definitely been pulled down by the turmoil in the stock markets," Commerzbank (DE:CBKG) analyst Daniel Briesemann said. "There were high bets on rising prices, so there is still some room for correction and to take profits. The cyclical aspect is also playing its part."
Overall optimism over the economic outlook is likely to stop industrial metals from falling too far, however, he said.
Lead, the biggest loser among the major industrial metals, has fallen 7 percent this week.
* LME COPPER: Three-month copper on the LME CMCU3 was down 0.6 percent at $6,803.50 a tonne by 1030 GMT.
* COPPER STOCKS: Copper stocks in LME-registered warehouses rose 20,125 tonnes or 6 percent, data showed on Friday, and are up by two-thirds in the last three weeks. On-warrant stocks - those not earmarked for delivery - have almost doubled in the same period to their highest since Sept. 2016.
* SHANGHAI INVENTORIES: Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 7.8 percent to 186,132 tonnes from last Friday, the exchange said today.
* COPPER TECHNICALS: LME copper is expected to break support at $6,815 a tonne, Reuters technical analyst Wang Tao said, and extend losses towards the next support at $6,697, citing Elliott wave analysis. FINANCIAL MARKETS: A 4 percent drop in Chinese shares dealt reeling world markets a fresh blow on Friday, as worries over rising borrowing costs and soaring volatility put them on course for their worst week since the height of euro zone crisis. MKTS/GLOB
* ALUMINIUM: Aluminium CMAL3 was down 1.4 percent at $2,139 a tonne, off an earlier seven-week low of $2,138.
* LEAD: LME lead CMPB3 was down 1.3 percent at $2,492 a tonne, with traders cashing in gains in the metal after its recent rally to 6-1/2 year highs.
* NICKEL CONTRACT: The Shanghai Futures Exchange said on Friday it will quintuple the intraday transaction fee on its nickel futures contract for May delivery with effect from Monday. OTHER METALS: LME nickel CMNI3 was down 1.8 percent at $12,910 a tonne, while zinc CMZN3 was 1.2 percent lower at $3,379 a tonne and tin CMSN3 was down 0.3 percent at $21,265 a tonne.
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