(Reuters) - Copper rose on Tuesday as the dollar fell, but investor sentiment was subdued due to worries that a European Union summit this week will achieve little to resolve the region's debt crisis. Some restocking by the world's top copper buyer China on favorable price arbitrage as well as promising U.S. housing data also lent support to industrial metals prices, countering bearish news that Cyprus has become the fifth state in the euro zone to seek a bailout. Three-month copper on the London Metal Exchange was $7,345 a tonne in official rings, from a close of $7,336 on Monday. "Europe is still a huge problem, and it's difficult to know if they can come to any conclusion to get out of the mess," Natixis analyst Nic Brown said. "Commodities have shown a little more resilience than the wider markets, with equities taking a big hit. But our view remains that the situation will improve in China in the second half." The European summit will be held in Brussels on June 28-29, but investors remained doubtful that the meeting, held for the 20th time, would yield any substantive measures to resolve the region's protracted debt crisis. The dollar .DXY fell against a basket of currencies, making dollar-denominated commodities more affordable for holders of other currencies. The prospect of improving growth in China, the world's second-largest economy, was also key to easing worries stemming from the financial turmoil in Europe. A spokesman for the Chinese trade ministry said on Tuesday that Beijing's export growth is likely to improve for the rest of the year and the country could meet its 2012 target for 10 percent growth in trade. "There are headwinds, but in general developing countries are moving to clear growth policies, especially with the Chinese interest rate cut, and we expect to see significant improvement in the second half of the year," Brown said. CHINA For the moment, demand for all base metals in China remains flaccid, as downstream industries suffer from slowing domestic growth and a fall in demand for Chinese exports from major economies, especially Europe - China's top trade partner. In a bid to revive aluminum output, China's top aluminum producing province of Henan has rolled out power subsidies to smelters, sources said on Tuesday, causing prices on the Shanghai Futures Exchange to fall more than three percent to the lowest in three years. Three-month aluminum on the LME was $1,852 per tonne in rings from $1,865 at the close on Monday. It touched $1,847.50 per tonne, its lowest in around two years. "Given their cyclical nature, industrial metals have suffered from the deterioration of leading economic indicators," Credit Suisse said in a research note. "However, the sector remains a mixed bag. With the exception of tin, all markets are undervalued. The larger markets - copper and to a lesser extent aluminum - have better supply-demand balances and look healthier from a technical point of view, making them our preferred picks." Three-month tin was $18,555 per tonne in rings from $18,500 at Monday's close, zinc was $1,792 from $1,805, and nickel was $16,325 from $16,420. Lead, untraded in rings, was bid at $1,781 from $1,788. (Additional reporting by Carrie Ho in Singapore; Editing by Anthony Barker)

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