Copper hit three-month lows on Monday, staying below the psychological $8,000 per tonne level, due to Chinese demand worries and renewed fears about the euro zone economy.
Nerves were fraying in wider markets as rising concerns on Spain's budget deficit sent safe-haven German bond prices to record highs and Spanish 10-year bond yields above 6 percent for the first time this year.
On currency markets, the euro fell broadly - hitting a two-month low against the dollar and yen - as the rising cost of Spanish borrowing fanned worries about the wider euro zone, and hence demand for industrial commodities.
Three-month copper on the London Metal Exchange fell as low as $7,885.25 a tonne, a level not seen since mid January.
By 12:40 SA time, it was down 0.2 percent at $7,970.50 after a slide of 2.8 percent on Friday, when Chinese data showing the economy growing at its slowest clip in nearly three years fuelled selling.
“We have the China slowdown fears and now the flare-out in Spanish yields, and that has put pressure on the euro, so that's a dampener on sentiment,” Societe Generale analyst Robin Bhar said.
“The fact that copper has broken below $8,000 means that it is possible in the short term that some will want to probe the downside a bit further,” he added.
In February copper was up nearly 15 percent for the year when it hit a high of $8,765 as investors bet on firm Chinese demand and tight global supplies.
That year-to-date gain thinned to less than 4 percent on Monday.
Spain's banks increased their reliance on cheap loans from the European Central Bank in March, borrowing almost double what they did in February.
Uncertainty over the euro zone and wider global economy and the issue of Chinese demand are expected to keep copper prices soft this year, although analysts are slightly more optimistic than they were in January, a Reuters poll showed on Friday.
The average forecast of 37 analysts in the survey, carried out in recent weeks, called for cash prices for the metal used in power and construction to average $8,445 a tonne in 2012, rising to $8,818 in 2013.
Commerzbank analysts pointed to a thinning in long positions as an indicator that the market's correction had further to run.
“As the CFTC statistics published on Friday reveal, speculative financial investors have withdrawn almost completely from copper,” the bank said.
“Given that the price slide continued even after the reporting date, it is likely that net long positions have since been reduced yet further. In the current market, this correction could initially continue.”
In other metals, tin was down 1.8 percent at $21,800 while nickel shed 1 percent $18,119. Aluminium was off 0.1 percent to $2,082. - Reuters