* Euro steadies vs dollar
* Investors stay cautious ahead of Greek elections
* Coming up: U.S. retail sales at 1230 GMT
By Harpreet Bhal
LONDON, June 13 (Reuters) - Copper edged higher on Wednesday
as the euro steadied against the dollar, but concern about
contagion from the euro zone debt crisis and upcoming elections
in highly indebted Greece kept investors cautious and prevented
further gains for metals.
Three-month copper on the London Metal Exchange rose
to $7,443.75 a tonne at 0855 GMT, up 0.7 percent from Tuesday's
close of $7,395 a tonne.
Base metals were supported by a slightly firmer euro against
the U.S. dollar. A weak dollar makes commodities priced in the
U.S. unit cheaper for holders of other currencies.
A 100 billion euro bank rescue plan for Spain earlier this
week failed to calm nerves about debt contagion, and uncertainty
remained about whether Greece will remain in the euro zone after
its June 17 elections.
Spanish 10-year yields, which hit euro-era highs of 6.86
percent on Tuesday, were seen rising further and testing the 7
percent level which is viewed by many as the point at which
borrowing from capital markets becomes unaffordable in the long
term.
"The positive sentiment surrounding Spain's rescue seems to
have faded. There is just too much uncertainty ahead of the
Greek elections and the euro summit and investors are cautious,"
said Robin Bhar, analyst at Societe Generale.
"Until we get some of these uncertainties resolved it is
difficult to see why anybody would want to put risk on. Copper
prices are likely to be volatile."
The metal used in power and construction is trading more
than 11 percent lower so far this quarter as worries about the
euro zone debt crisis and uncertainty about demand from top
consumer China weigh. It is down 1.8 percent in the year to
date.
"Once again, market participants chose to remain on the
sidelines, occupied by the macro newsflow in Europe in addition
to concerns over lost growth momentum in China and the release
of numerous macro statistics earlier this week," Andrey
Kryuchenkov, analyst at VTB said in a note.
"The fundamental picture was also little changed from May,
with copper still trading mostly off macro events."
CHINA DEMAND EYED
Traders said the recent price drop has spurred Chinese
copper demand, with physical premiums rising by a steep $40 to
$60-$70 per tonne over LME prices since early May.
A Qingdao-based trader said she had seen signs of a small
pickup in drawdowns from bonded warehouses in Shanghai, as LME
copper's premium over Shanghai eased to 1,075 yuan from nearly
4,000 yuan in early May.
Macquarie analyst Bonnie Liu said the surprise 12 percent
rise in China's copper imports last month also offered hints
that Chinese demand was starting to recover.
"It is worth noting that this big import number for May
happened at the same time as copper inventory was going down in
China for both bonded and ShFE warehouses," she said in a recent
note.
"This implies improving demand from downstream end-users
from the second quarter compared with the weakness at the start
of the year."
But market players warned the rise in real demand was still
slight, and much smaller than the import figures and a current
backwardation in ShFE copper's front-to-forward-month spreads
would suggest.
In other metals, tin was at $19,602 a tonne from
Tuesday's close of $19,700 a tonne, and zinc rose to
$1,888 from $1,880.
Lead rose to $1,901.50 from $1,895.50 and aluminium
was at $1,969 from $1,968. N ickel edged up to
$17,223 from $17,175.
China's nickel ore imports are expected to have hit a record
high in May after a rush to purchase laterite ore ahead of a
curb on shipments by top supplier Indonesia, although high
inventories could put pressure on nickel prices.
Metal Prices at 0855 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 335.70 2.15 +0.64 344.75 -2.63
LME Alum 1968.50 0.50 +0.03 2020.00 -2.55
LME Cu 7443.50 48.50 +0.66 7600.00 -2.06
LME Lead 1902.25 6.75 +0.36 2034.00 -6.48
LME Nickel 17216.00 41.00 +0.24 18650.00 -7.69
LME Tin 19603.00 -97.00 -0.49 19200.00 2.10
LME Zinc 1886.25 6.25 +0.33 1845.00 2.24
SHFE Alu 15885.00 20.00 +0.13 15845.00 0.25
SHFE Cu* 54310.00 370.00 +0.69 55360.00 -1.90
SHFE Zin 14770.00 35.00 +0.24 14795.00 -0.17
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
