Copper came under pressure on Monday, as the U.S. dollar rose against the euro and on worries about oversupply in China, the world's top copper consumer.
Investors also sought further economic data to gauge the health of the global economy, while a 4,250 tonne fall in copper inventories helped underpin prices.
European shares turned positive after an earlier fall, taking their cue from a rally in U.S. stock index futures, but miners like BHP Billiton and Rio Tinto remained in negative territory.
Copper for three-months delivery on the London Metal Exchange was $4,415/4,420 (U.S.) a tonne in the open outcry trade, versus $4,450 a tonne at the close on Friday.
“The...dollar has been the driving force,” analyst Robin Bhar at Calyon said.
The euro fell against the dollar, suffering from Friday's data showing Europe's economy was in worse shape than earlier thought. A stronger dollar makes industrial metals more expensive for local currency holders.
“Market's drifting lower in the absence of fresh news. We need to see more upbeat data for the rally to continue. If the dollar can't stay above $4,450 a tonne, then (there is) a good chance it will go lower,” an LME trader said.
Adding to the poor sentiment was fear about oversupply in China, where the government and smelters are said to have been stockpiling since the start of the year.
“The China story is in the background. A lot of the imports seem to be for stockpiling rather than going into consumption. The bulk of it is going to stock building by the government and consumers and that's creating the oversupply,” Mr. Bhar said.
China's copper imports hit a record high in April, when output was at the second highest.
The arbitrage opportunity between Shanghai and London, which has been a major factor driving copper imports, has narrowed, but some analysts still see imports remaining high in May.
“The falling arbitrage won't be reflected in copper imports until two weeks or a month later. For May, scrap copper imports will hit a multi-months high, and copper cathode imports will remain at or fall slightly from April's level,” said Zhu Yanzhong, an analyst at Jinrui Futures.
Falling copper inventories limited further losses. Stocks dropped 4,250 tonnes to 353,550 tonnes, their lowest since early January. Cancelled warrants – material set to leave the warehouses – fell to 59,850 tonnes from Friday's 61,300 tonnes.
LME's aluminum inventories have risen to within a stone's throw of 4 million tonnes, an unprecedented high level. LME aluminum to $1,509/1,510 from $1,522.
“China's aluminum smelters are restarting. We expect to see a big jump in domestic output in May. If demand from other regions does not improve, aluminum prices will be under more pressure,” said Yingxi Yu, an analyst at Barclays Capital in Singapore.
Falling tin output in China, shrinking exports by Indonesia and a physical squeeze on LME appear set to help tin sustain its recent rally, in contrast to falls in other base metals' prices.
Tin was at $13,450 a tonne from $13,650.
Zinc was at $1,505 a tonne from Friday's $1,495 a tonne while battery material lead fell to $1,465 from $1,482. Nickel fell to $12,150/12,155 from $12,425.
