MARKETS-METALS (UPDATE 5) * Euro steady but hovers near 4-yr low vs dlr * Nickel tumbles more than 5 percent, technical gloomy * Lead, zinc, hit multi-month lows (Recasts, updates prices and comments) By Humeyra Pamuk and Maytaal Angel LONDON, June 2 (Reuters) - Copper hit its lowest in nearly two weeks on Wednesday as the dollar rose, Europe's debt crisis continued to knock confidence, and worries over the sustainability of robust demand from China lingered. Data out on Tuesday pointed to a slowdown in the pace of manufacturing activity in China, the world's top metals consumer, as gradual policy tightening took a toll on new orders. Copper for three months delivery on the London Metal Exchange fell to $6,645 a tonne at 1426 GMT, after touching $6,560 a tonne, its lowest since May 21 and versus a close of $6,750 a tonne on Tuesday. Zinc tumbled to its lowest since September 2009, nickel fell more than 5 percent to hit a near four-month low, while lead hit its lowest in 10 months. "We're still seeing a lot of risk reduction. People are very uncertain about the macro backdrop even though we've had good data out of the U.S., it's being over-ridden by concerns over sovereign debt and a China slowdown," said Gayle Berry, analyst at Barclays Capital. U.S. stocks held gains on Wednesday after pending home sales data, but metals remained under pressure from falls in European shares and further gains in the dollar versus the euro. "It's sentiment more than anything else," said Alex Heath, head of base metals at RBC Capital Markets. "Being long commodities was something people were comfortable with, but that has kind of changed." The euro remains sensitive to signs the sovereign debt crisis might spread to its banking system. However, it has stabilised after government sources outside Europe said they would not stop investing in the currency. A weaker euro makes metals more expensive for European investors. UNREPORTED STOCKS Unreported base metals stockpiles accumulated in China in the first quarter, analysts at RBS said in a research report, adding that could dent short-term buying. "Even assuming that strong underlying Chinese demand growth is sustained; it will still take some time to erode the mountain of unreported Chinese base metal stocks," RBS said. "We believe that a period of lower Chinese base metal imports (copper and nickel) or potential net exports (zinc and aluminium) will be a headwind for base metals in H210." On LME, copper stocks stood at 475,225 tonnes, their lowest since mid-December 2009 and some analysts believe the fundamentals still make it a good bet. "Even a small improvement in sentiment and clarity on European and Chinese growth trends would trigger a sharp increase in both volumes and prices, in our view, as consumer stocks remain low, global growth momentum is still very supportive, and the funds remain positive for the medium term," said Andrey Kryuchenkov, analyst at VTB Capital. Zinc fell to $1,808 from $1,853, having earlier hit a nine-month low of $1,779, while battery material lead was at $1,700 a tonne, after hitting a 10-month low of $1,670 a tonne and versus $1,750 at the close on Tuesday. "It's understandable given rising inventories, China becoming a net exporter again and generally, the fundamental backdrop for lead not as strong as some of the other metals," said Berry. Tin was at $17,600 a tonne from $17,800, aluminium was at $1,974 a tonne from $1,992, while nickel dropped to $19,250 a tonne, its lowest since mid-February, as the technical outlook turned gloomy. It was last bid at $19,600 a tonne versus $20,450. Metal Prices at 1418 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 300.10 -6.20 -2.02 334.65 -10.32 LME Alum 0.00 -1992.00 -100.00 2230.00 -100.00 LME Cu 6627.00 -123.00 -1.82 7375.00 -10.14 LME Lead 1695.00 -55.00 -3.14 2432.00 -30.30 LME Nickel 19425.00 -1025.00 -5.01 18525.00 4.86 LME Tin 17550.00 -250.00 -1.40 16950.00 3.54 LME Zinc 1801.00 -52.00 -2.81 2560.00 -29.65 SHFE Alu 14935.00 -220.00 -1.45 17160.00 -12.97 SHFE Cu* 53400.00 -700.00 -1.29 59900.00 -10.85 SHFE Zin 15210.00 -350.00 -2.25 21195.00 -28.24 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional Reporting by Nicholas Trevethan in Singapore, Editing by William Hardy and Sue Thomas)

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