* Copper reverses gains in after-hours as dollar rises
* COMEX copper dips below 200-day moving average
* U.S. job creation at fastest pace in 5 years
* Coming up: U.S. wholesale inventory/sales data Tues (Recasts, adds double byline and dateline, updates prices, adds graphic and comments)
By Chris Kelly and Sue Thomas
NEW YORK/LONDON, May 6 (Reuters) - Benchmark copper futures eked out a modest gain on Friday, after upbeat U.S. employment data helped calm commodity markets spooked into free fall on Thursday by fears of slowing growth in the world's No. 1 economy.
But gains were reversed in after-hours trade, as the U.S. dollar extended gains against the euro and chatter of a Greek exit from the euro zone heightened concerns about the sustainability of the global recovery.
London Metal Exchange (LME) copper for three-month delivery rose $5 to end at $8,825 a tonne.
The gains quickly evaporated in late New York trade, with the price dipping back down below $8,800.
Sean Corrigan, chief investment strategist with Diapason Commodities Management said he believed prices could fall further toward $8,000 a tonne.
"I think that's a sensible sort of retracement target from this market. If it gets any worse than that then I think you are in trouble," he told Reuters.
COMEX copper for July delivery fell 2.25 cents to settle at $3.9755 per lb, placing the contract below its 200-day moving average.
"If we break below there and start closing below there, it's going to become a sell-the-rallies type of market," said Matthew Zeman, head of trading with Kingsview Financial in Chicago.
"Right now, it's still a buy-the-dips type of market."
The day began with a generally upbeat U.S. employment report that showed companies created jobs at the fastest pace in five years, pointing to underlying strength in the economy, even as the jobless rate rose to 9.0 percent.
"It's a pretty good number, but we've always made the point that this is volatile," said Michael Shaoul, chairman of Marketfield Asset Management in New York.
"To us, it looks like a good recovery taking place in payrolls, and it goes against the worries that came about with the jobless claims yesterday."
Commodities across the complex showed signs of stabilization after the U.S. jobs data reassured investors who had been rattled by worries over global growth and days of sharp price falls.
Barclays Capital said the sell-off in metals had been overdone, and presented investors with a new buying opportunity.
"Those who do not choose to take advantage of this window are likely to be disappointed later," it said in a note.
Copper futures open interest figures showed a fall in the near term (the cash to May contract prompt date) alongside Thursday's falling prices, suggesting long liquidation. But three-month open interest jumped, which alongside falling prices suggests fresh short positions.
In another spot of supportive news, inventories of copper, aluminium and nickel at LME warehouses saw net outflows, the latest data showed.
Tin, which fell more than 7 percent on Thursday, rose more than 2 percent to close at $29,650 a tonne.
Aluminium shed $27 to close at $2,608 a tonne. Metal Prices at 1827 GMT COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct
move COMEX Cu 397.10 -2.70 -0.68 444.70 -10.70 LME Alum 2608.00 -27.00 -1.02 2470.00 5.59 LME Cu 8830.00 10.00 +0.11 9600.00 -8.02 LME Lead 2280.00 -15.00 -0.65 2550.00 -10.59 LME Nickel 24600.00 75.00 +0.31 24750.00 -0.61 LME Tin 29650.00 750.00 +2.60 26900.00 10.22 LME Zinc 2140.00 15.00 +0.71 2454.00 -12.80 SHFE Alu 16610.00 -110.00 -0.66 16840.00 -1.37 SHFE Cu* 65940.00 -1100.00 -1.64 71850.00 -8.23 SHFE Zin 16330.00 -390.00 -2.33 19475.00 -16.15 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Marie-Louise Gumuchian and Melanie Burton in London; editing by Alden Bentley)