LONDON (Reuters) - Copper steadied on Thursday after hitting four month lows the previous session, but sentiment was cautious given worries Spain, Portugal and Italy might be hard hit if Greece leaves the euro and defaults on its debt. The metal used in power and construction snapped four straight sessions of falls but worries surrounding the euro zone debt crisis, a demand slowdown in top consumer China and the delicate state of the U.S. economy prevented further gains. Three-month copper on the London Metal Exchange (LME) traded at $7,642 a metric ton (1.1023 tons) at 09.45 a.m. EDT, down 0.17 percent from a close of $7,655 on Wednesday. Worries about financial turmoil in Greece were heightened earlier after the European Central Bank said it had stopped providing liquidity to some Greek banks that had not been successfully recapitalized. In addition, there were reports customers of Greek banks were moving funds in anticipation of its exit from the euro. "Europe is the trigger but (even) markets such as India, China, there's signs of weakness," said ThomsonReuters-GFMS managing director Neil Buxton. He added: "There's still downside potential. There's absolutely no sign that there's going to be some kind of coordinated supply response." Investors are largely betting on a Greek euro exit, given Greek politicians who reject conditions for a bailout that is keeping the country's finances afloat are seen likely to win next month's election. The greater worry now is contagion. Spain was also in focus, as it sold 2.49 billion euros of shorter-dated government bonds in an auction on Thursday, with average yields rising significantly compared with previous sales of the paper. Copper, which rallied by more than 12 percent between the beginning of the year and early February, has since shed almost all of its 2012 gains, falling steeply on Wednesday to a four-month low of $7,625. "At this stage, many commodity complexes are severely oversold. However, markets need a headline to tee off on, and so far, there has not been much in the way of encouraging news out of Europe. If anything, things seem to be getting worse, as the focus now seems to be reverting away from the political deadlock in Greece and towards the deteriorating rate situation in Spain," said INTL FC Stone analyst Ed Meir. COPPER INFLOWS Data from the LME showed overall inflows of 2,100 metric tons of copper into warehouses monitored by the exchange, with those in Busan, South Korea drawing in 2,875 metric tons of the metal. Traders said China's smelters and merchants were delivering around 110,000 metric tons of refined copper cathode to London Metal Exchange (LME) warehouses in South Korea, in a rare hefty outflow of inventories that could pressure copper prices. The exports come just two weeks after the trading unit of Jiangxi Copper Co Ltd , the country's top producer, said a group of copper smelters as well as trading firms would export refined copper cathodes to LME to help ease tight global supplies and trim near-record stockpiles at home. In other metals, aluminum was at $2,036.25 a metric ton from Wednesday's close of $2,035 a metric ton while zinc traded at $1,888 from $1,898. Nickel was at $16,999 a metric ton from $17,005, tin was at $19,310 from $19,675 and lead traded at $1,944.25 from $1,971.

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