Copper climbed 3.5 percent before reversing gains to turn negative on Monday, as falling equity markets and concerns over weak demand depressed sentiment.
Initial relief that U.S. payrolls fell by a smaller-than-expected 524,000 in December was short-lived as investor fears over the global economy returned.
European shares fell in early trade to track a sell-off on Wall Street on Friday, while U.S. crude slipped to under $39 a barrel.
By 1055 GMT, copper for three month delivery on the London Metal Exchange fell to $3,265 a tonne from $3,400 at the close on Friday and compared with a session high at $3,520.
"The reason we (initially) saw prices move up was short-covering," said Gayle Berry, an analyst at Barclays Capital. "Investors were largely covering positions both ahead of index re-weighting but also because of the speculation on whether SRB will be re-stocking and by how much."
China's State Reserves Bureau has scheduled to meet Chinese zinc smelters to buy the metal for state reserves, part of its plan to buy base metals to help loss-making smelters and boost consumption, industry sources said.
Prices of copper, the metal used in power and construction have fallen about 60 percent since a record high of $8,940 in July 2008.
Adding to the overall gloom, copper stocks rose 5,925 tonnes to 369,500 tonnes -- its highest level in five years.
