Copper fell on Monday on concerns about weak Chinese consumption, the threat of high oil prices to a fragile global economy and the funding of debt-wracked Europe.
A Group of 20 meeting at the weekend failed to reach agreement on making more funds available to Europe and said EU leaders must commit more money to fight the debt crisis at their summit this week.
The comments piled pressure on Germany to drop its opposition to a bigger European bailout fund.
Benchmark three-month copper on the London Metal Exchange dropped 1.06 percent to $8,440 a tonne by 12:21 SA time from $8,530.50 at the close Friday, when it posted its best week since mid-January.
Copper has risen more than 11 percent so far this year, but investors have been struggling to push it higher as poor demand from top copper consumer China and a debt-strained Europe counter upbeat US economic data.
“China is probably stockpiling, and demand in China, by Chinese standards, is relatively weak at the moment, (so) it becomes harder to justify these price levels,” said BNP Paribas strategist Stephen Briggs.
“Problems in Europe haven't really gone away, (and) the rest of the world is basically saying, 'Europe is rich; they should be able to sort their own problems out', so it's a reminder that it's all a bit messy.”
Rising energy prices, which touched 10-month highs last week, stirred the spectre of global recession, with Europe probably having the most to fear as its brittle economic growth falters.
Those concerns add to worries about Chinese demand, which has yet to pick up strongly since the Lunar New Year break in January.
“We are seeing improving US data, but the European debt crisis is continuing and China's manufacturing PMI data is still (contracting),” said Grace Qu, an analyst at CRU in Beijing.
Highlighting weak Chinese physical demand, at the end of last week stocks in Shanghai warehouses remained near levels last seen in 2002, at more than 216,000 tonnes.
That is in contrast to LME stockpiles, where the latest data showed stocks down at 300,475 tonnes, their lowest since August 2009, of which 212,650 tonnes are available to market, equivalent to 3.8 days of global consumption.
UNDERPINNING
Looking forward, China's National Bureau of Statistics is scheduled to release the official manufacturing activity number on Thursday, and if it confirms last week's poor HSBC flash data reading, copper may be prone to more selling.
Underpinning copper, however, is nearby supply tightness, which may have been behind a surge in cash copper on Friday to a premium of more than $20 versus three-month prices , its biggest in more than a year. That premium eased to $3 on Monday.
Also lending support, the euro dipped but stayed close to recent highs versus the dollar ahead of a fresh injection of liquidity by the European Central Bank. A strong euro makes dollar-priced metals cheaper for European investors.
Meanwhile in the United States, more positive data on Friday showing upward revisions of new home sales in prior months and a drop in the supply of property on the market added weight to the budding economic recovery.
A separate report showed US consumer confidence hitting its highest point in a year this month despite a strong rise in gasoline prices.
In other metals traded, packaging metal aluminium fell 0.60 percent to $2,314 from $2,328, with most of the near record 5.1 million tonnes of LME stocks still tied up in financing deals and not available to the market.
Soldering metal tin fell 0.63 percent to $23,700 a tonne from $23,850, zinc, used in galvanizing fell 0.82 percent to $2,063 from $2,080, burdened by high LME stocks.
Battery material lead fell 0.68 percent to $2,193 from $2,208, while stainless-steel ingredient nickel fell 0.81 percent to $20,001 from $20,175. - Reuters