Copper slipped on Monday, as the euro came under pressure on renewed worries about Spain's debt troubles and contagion to other euro zone countries, but falls for base metals were limited by signs of some spot buying from top consumer China.
Copper Slips On Euro Zone Debt Caution, Weak Euro
Benchmark copper on the London Metal Exchange fell to $7,296.75 tonne at 1017 EDT, down 0.2 percent from Friday's close of $7,310 a tonne.
Initial optimism following an agreement by the leaders of Germany, France, Italy and Spain on a 130 billion euro ($156 billion) package faded as investors remained pessimistic that this week's European Union summit will yield concrete measures to tackle the region's debt crisis.
The June 28-29 summit of European leaders is likely to include discussions about specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund.
"Markets are holding their fire at the moment to see what the Europeans come up with at this week's leadership conference. If they don't see any movement on key proposals, they very well could drive the markets lower again," INTL FCStone analyst Ed Meir said.
The focus also remained on Spain, which formally requested euro zone rescue loans on Monday to recapitalize banks that are laden with bad debts.
Highlighting investors' fragile sentiment, the euro fell to its lowest in nearly two weeks against the dollar. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.
Limited copper restocking by Chinese investors, designed to exploit a favorable arbitrage between London and Shanghai, supported prices, but LME copper's fall to a six-month low on Friday showed markets were still worried the problems faced by Europe, the United States and China might crimp demand for metals.
Copper prices dropped to a six month low at $7,219.50 on Friday, and were trading 3.8 percent lower in the year-to-date as investors worry about the outlook for industrial metals demand in light of the slowdown in the global economy.
"There has been some consumer buying for copper, but it was only some spot buying and the size moderate. You won't have the large hedges coming in at this price as people don't have enough conviction and think the market might be trending lower," Ivan Szpakowski, analyst at Credit Suisse said.
A Shanghai-based trader said a slight rise in physical copper demand was expected to put a floor below copper prices as consumers took advantage of lower prices and the favorable LME-ShFE arbitrage to restock a bit.
Aluminum slipped to $1,856 from Friday's close of $1,861.
"Following the sharp decline in energy prices and thanks to subsidized electricity prices in China, we are also unlikely to see any significant cuts in production (of aluminum) in the foreseeable future, so the aluminum price can be expected to remain under pressure," Commerzbank analysts said in a note.
Tin fell to $18,650 from $18,675, while zinc, used to galvanize steel, slipped to $1,798 from $1,800 at Friday's close.
Battery material lead fell to $1,808 from $1,816 and nickel was at $16,374 from $16,575.
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