LONDON, June 20 (Reuters) - Copper fell on Monday as investors lost their appetite for risk after European finance ministers postponed an emergency loan to help Greece avoid defaulting on its debt and China demand worries weighed.
Three-month copper on the London Metal Exchange fell 1.1 percent to $8,987.75 a tonne at 0950 GMT, after closing up 0.3 percent in the last session.
"The Greece situation has been weighing on sentiment and I think there are still concerns about Chinese monetary policy and the direction that's going to take," Barclays Capital analyst Gayle Berry said.
"Those are the two largest underlying concerns in the market at the moment. Until we get some kind of resolution on the macro front we'll continue to see this volatile price action."
China last week raised it bank reserve ratios to try and douse inflation, which is running at its fastest pace in almost three years.
Euro zone finance ministers postponed a final decision on extending 12 billion euros ($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.
The move sent world stocks, commodities prices, and the euro lower. The euros fell against the dollar, making commodities, including base metals, more expensive for holders of other currencies.
NICKEL LOW
Nickel prices hit their lowest since November at $21,350 a tonne. The price of the metal, used to make steel, is down by 27 percent from the year's highs reached in February.
"At these levels nickel is looking oversold," Berry said. "From a fundamental perspective we don't see any reason why nickel has underperformed to this extent."
"LME inventories are falling yet prices have been very weak. I think the market is pricing in expectations of a better outlook for supply in the second half of the year."
The International Nickel Study Group said in April it expected the nickel market to record a 60,000-tonne surplus this year, compared with a deficit of 30,000 tonnes in 2010.
Nickel inventories in LME-monitored warehouses fell by 516 tonnes to 110,880 tonnes and are down nearly 20 percent since the start of the year to a near a two-year trough, data on Monday showed.
"We believe that demand growth should at least partially absorb additional supplies, particularly once the Japanese steel industry recovers again," Credit Suisse said in a research note.
Lead inventories in LME-monitored warehouses fell by 125 tonnes to 322,575 tonnes, data showed on Monday, but are still within spitting distance of 16-year highs.
Lead was down 1.8 percent at $2,406, from $2,450 at the close on Friday.
Aluminium was down 0.6 percent at $2,529 per tonne from $2,545, zinc was $2,168 from $2,187 and tin off 1.6 percent at $24,600 from $25,005.
Metal Prices at 1006 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent
move COMEX Cu 405.65 -4.55 -1.11 444.70 -8.78 LME Alum 2641.00 96.00 +3.77 2470.00 6.92 LME Cu 8900.00 -195.00 -2.14 9600.00 -7.29 LME Lead 2515.00 65.00 +2.65 2550.00 -1.37 LME Nickel 21600.00 -75.00 -0.35 24750.00 -12.73 LME Tin 25000.00 -5.00 -0.02 26900.00 -7.06 LME Zinc 2260.00 73.00 +3.34 2454.00 -7.91 SHFE Alu 16895.00 -30.00 -0.18 16840.00 0.33 SHFE Cu* 67260.00 -740.00 -1.09 71850.00 -6.39 SHFE Zin 17005.00 -225.00 -1.31 19475.00 -12.68 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by Alison Birrane)
