LONDON: Copper fell on Tuesday after a downgrade of France's credit rating reminded investors of the festering euro zone debt crisis and took the steam out of a Monday rally built on optimism over positive announcements from Europe and the United States. Prices for the industrial metal used widely in construction and power followed shares lower after Moody's issued an expected downgrade of France's credit rating, citing an uncertain fiscal outlook in the euro zone's second biggest economy. "This is exactly the kind of thing we can expect to see over the coming quarters - a few headlines of good news that are then reversed by ongoing problems, particularly in Europe and the US," said Barclays analyst Gayle Berry. "I think that until those (growth concerns) are tackled at the core then prices are always going to be vulnerable to the ebb and flow of headlines," she added. Three-month copper on the London Metal Exchange had slipped 0.5 per cent to $7,761 a tonne by 1103 GMT. Still, the metal has risen around 2 per cent so far this year. It closed at $7,803 on Monday after rising to its highest since Nov 2, helped by reports showing US home sales rose last month and a gauge of home builder sentiment climbed to a six-year high in November. Construction is a significant market for copper with a little over 400lbs of copper used in a typical US home. In China, home prices rose 0.05 per cent in October from September, according to calculations based on official data this week, adding to evidence of a recent, mild recovery in the country's property market and frustrating the government's efforts to temper prices. Signs that housing inflation is not easing in China, the world's biggest copper consumer, could erode support for copper, ANZ Research said in a note. "With a focus on housing inflation, the latest data could prompt the government to refrain from relaxing curbs on the property market - bearish for copper," ANZ said. "Markets are closely watching for any policy direction from the new leadership and will likely direct sentiment for base metals," ANZ added. Berry saw the base metals market remaining largely range-bound in the near term.

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