* Rio declares force majeure at 2 Canada aluminium smelters * Euro hits 15-month low against dollar * Coming next: U.S. job data; 1330 GMT By Silvia Antonioli LONDON, Jan 5 (Reuters) - Copper was down on Thursday, as the euro weakened and investors remained nervous about the precarious debt situation in the euro zone and its effects on the region's banks, although the results of a French debt auction helped soften some fears about the country's solvency. Benchmark copper on the London Metal Exchange fell 0.70 percent to trade at $7,485 a tonne in official rings from a close of $7,540 a tonne on Wednesday. Concerns over euro zone sovereign debt and the region's banks sent the euro to a 15-month low against the dollar on Thursday, although the first French bond auction of 2012 helped dispel some fears about the ability of governments to fund their massive debts. The crisis has crippled economic growth prospects and has weakened the outlook for industrial metals demand. This, coupled with an economic slowdown in the world's second-largest economy, China, pushed copper prices 21 percent lower in 2011. China, the largest market for industrial metals, accounts for about 40 percent of global refined copper supply. "In base metals there is still higher risk aversion of market players, and metals are also suffering because of the stronger dollar," said Commerzbank analyst Daniel Briesemann. A stronger dollar makes commodities priced in the U.S. currency costlier for holders of other units. "We'll have to wait for next week to see what economic data will suggest, especially from China ... In November the Chinese have acted opportunistically, and with lower prices they imported more copper. In December prices were also low, so I expect we'll see some good import figures," Briesemann said. ALUMINIUM SURPLUS French borrowing costs rose slightly when the euro zone's second-largest economy sold debt for the first time this year but demand was solid despite concerns the country could lose its AAA credit rating. The European banking sector has also been heavily affected by the euro zone sovereing debt crisis and by stringent regulation requiring banks to hold higher amounts of liquidity. The CEO of Italy's largest bank, Unicredit, tried to reassure investors over the bank's heavily discounted 7.5 billion euro ($9.68 billion)rights issue as the share price suffered a second day of steep falls. "The situation in Europe is still precarious at best," said RBC Capital in a research note. "Unless the Chinese surprise us with further easing of bank reserve requirements, base metals look set to underperform through the Lunar New Year Holidays." Aluminium traded at $2,028 a tonne in official rings, down from a last bid of $2,064 on Wednesday. Rio Tinto Alcan's force majeure on aluminum output from two of its smelters in Canada due to separate operational and labor issues, failed to lift aluminium prices. "Those two smelters are too small to have an impact on the aluminium market," Briesemann said. "Aluminium is in such an oversupply that a couple of smelters closing for a couple of weeks shouldn't be worrying." Bankrupt primary aluminium producer ZALCO was in talks with eight potential buyers for a takeover of part or all of its plant in Zeeland, the Netherlands, the company's receiver said late on Wednesday. Tin traded at $19,450 from $19,605, while zinc, used to galvanize steel, exchanged hands at $1,847 from $1,869 at Wednesday's close. Battery material lead, untraded in rings, was bid at at $2,035 from $2,060, and nickel, also untraded in rings, was bid at $18,555 from $18,800. Metal Prices at 1315 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct move COMEX Cu 340.05 -3.30 -0.96 444.70 -23.53 LME Alum 2042.75 -33.25 -1.60 2470.00 -17.30 LME Cu 7517.75 -22.25 -0.30 9600.00 -21.69 LME Lead 2045.50 -14.50 -0.70 2550.00 -19.78 LME Nickel 18636.00 -164.00 -0.87 24750.00 -24.70 LME Tin 19750.00 145.00 +0.74 26900.00 -26.58 LME Zinc 1854.75 -14.25 -0.76 2454.00 -24.42 SHFE Alu 15960.00 45.00 +0.28 16840.00 -5.23 SHFE Cu* 56060.00 270.00 +0.48 71850.00 -21.98 SHFE Zin 14865.00 90.00 +0.61 19475.00 -23.67 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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