* Euro's big four seek way out of crisis in Rome * German business sentiment falls to 2-year low * Metals producers review expansion projects By Susan Thomas and Manolo Serapio Jr LONDON, June 22 (Reuters) - Copper hovered near six-month lows on Friday as a firm dollar, weak German and U.S. data and a downgrade to some of the world's leading banks deepened concerns about the global economy and demand for raw materials. Three-month copper on the London Metal Exchange extended losses into a third straight session, trading at $7,281 a tonne in official rings and touched a session low of $7,219.50, its weakest since December 19, 2011. Investors have been retreating from riskier assets after China's factory sector shrank for an eighth straight month, business activity in the euro area contracted for a fifth month and U.S. manufacturing grew at its slowest pace in 11 months. German business sentiment fell to its lowest level in more than two years, and Moody's cut the credit ratings of 15 global banks including JPMorgan and Morgan Stanley. "Markets are falling across the board on a whole lot of negative macro news flow out yesterday, in particular from China and the United States. That seems to be the focus point at the moment," said Macquarie commodities analyst Duncan Hobbs. Oil briefly touched its lowest in 18 months, before bouncing back, and European stocks fell. Copper has lost about 14 percent this quarter and analysts see room for the industrial metal to drop further. "Commodity prices have come off quite substantially over the past few months, so we would expect them to reach the natural bottom, but notwithstanding more shocks, the risks are still to the downside," said Matt Fusarelli, analyst at Australia-based consultancy AME Group. A firmer dollar, which makes dollar-priced assets more costly for users of other currencies, also weighed on copper and the other base metals. Chinese players were away for a public holiday, helping to hold off what could have been a big sell-off in Chinese markets in response to the overnight slide in global markets. Ahead of a summit in Brussels next week, leaders of Germany, France, Italy and Spain will meet in Rome on Friday to discuss ways to restore confidence in the euro zone. BLESSING IN DISGUISE The sharp decline in industrial metals prices has prompted many producers to review expansion projects, with some being postponed until a clearer demand picture emerges. That might eventually be good for prices, said AME's Fusarelli. "The longer that we see prices depressed, a lot of the planned projects will be re-examined, so a lot of the oversupply which we think was expected in 2014, say for copper, there's now a question mark around it. "For a lot of the producers, the current market movements may in turn be a blessing in disguise," he said. In aluminium, for example, Fusarelli said because current prices mean nearly three quarters of the world's capacity is either breaking even or loss making, many smelters have shut down, some of them permanently. Aluminium smelters in China's Xinjiang province have as much as halved their capacity expansion plans for 2012 because of low metal prices and costly power, analysts say. China is the world's top producer and user of the metal. Three-month aluminium was $1,864 a tonne in rings, after hitting a two-year low of $1,854. It closed at $1,870 on Thursday. For now, base metals prices may fall further before any strong rally sets in, with Chinese demand also remaining sluggish. A fall in LME copper prices to six-month lows this month helped to narrow the price gap between Chinese and international copper prices, encouraging local traders to export excess inventory. In May, China exported 102,375 tonnes of refined copper, nearly four times more than in April, with most of the shipments bound for South Korea. Three-month tin was $18,360 in rings, from $18,800 at the close on Thursday, while zinc was $1,804.50 f rom $1,824. Lead, untraded in rings, was bid at $1,810 f r om $1,827, and nickel at $16,300 from $16,450. Metal Prices at 1211 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 328.60 -1.20 -0.36 344.75 -4.68 LME Alum 1863.75 -6.25 -0.33 2020.00 -7.74 LME Cu 7292.75 -48.25 -0.66 7600.00 -4.04 LME Lead 1812.50 -14.50 -0.79 2034.00 -10.89 LME Nickel 16303.00 -147.00 -0.89 18650.00 -12.58 LME Tin 18350.00 -450.00 -2.39 19200.00 -4.43 LME Zinc 1804.50 -19.50 -1.07 1845.00 -2.20 SHFE Alu 15560.00 -195.00 -1.24 15845.00 -1.80 SHFE Cu* 54350.00 -870.00 -1.58 55360.00 -1.82 SHFE Zin 14630.00 -300.00 -2.01 14795.00 -1.12 ** 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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