METALS-Copper falls on Spain, Greece worries

* Copper down as Spain optimism fades into worry
* Investors stay cautious ahead of Greek elections
* U.S. Redbook retail weekly sales due at 1255 GMT

(Updates prices; adds quotes, details)
By Carrie Ho
SHANGHAI, June 12 (Reuters) - London copper slipped on
Tuesday, giving gains in the previous session, as relief over
the European Union's 100-billion euro ($125.11 billion) bailout
of Spain's banks turned to worry over how the funds would affect
its borrowing costs.
Uncertainty over Greek elections on Sunday is also keeping
investors cautious as European officials discuss contingency
plans should Greece exit the euro zone.
Spain's worsening finances and the possibility of Greece
leaving the single currency area have again thrust fears of euro
zone debt contagion back into the limelight, as seen in Spain's
rising 10-year bond yields on Monday.
The markets broadly priced in worries that the euro zone
debt crisis will crimp global demand for commodities and even
spill over to the rest of the world, with Asian equities falling
along with most base metals, oil and other riskier assets.

Three-month copper on the London Metal Exchange fell
0.5 percent to $7,382.50 a tonne by 0721 GMT after rising 1.7
percent on Monday, although it remains on track to post a gain
of 1 percent this week.
The most-active September copper contract on the Shanghai
Futures Exchange fell 1.1 percent to close at 53,740
yuan ($8,400) a tonne, after rising 2.5 percent in the previous
session.
"Sentiment is dampened by all the bad news on the global
economy today. Investors are selling on indications that major
economies are slowing down," said an analyst with an
international trading firm.
"With the fragile sentiment now, even if good news comes out
of the Greek elections, prices won't move much. But if the
reverse happens, a new bout of selling will follow," he added.
The euphoria over an EU bailout for Spain's troubled banks
has faded as concerns rise about Greece's elections, which may
worsen the euro zone crisis.
European finance officials have discussed limiting the size
of withdrawals from ATM machines, imposing border checks and
introducing euro zone capital controls as a worst-case scenario
should Athens decide to leave the euro, underscoring the severe
consequences of that possibility.
Fears of the euro zone debt crisis spilling over to the rest
of the world, which helped shave around 12 percent off LME
copper prices since May , were also highlighted by two U.S.
Federal Reserve policymakers.
Adding to the gloom are signs two of the world's leading
emerging economies, India and China, are starting to falter, the
latest report from the OECD showed on Monday.
Atlanta Federal Reserve President Dennis Lockhart also
dashed hopes of additional monetary easing in the United
States.

LOW PRICES TIGHTEN SPOT SUPPLY IN SHANGHAI
The ShFE front-month contract has been trading at a
premium over the third-month contract since May 9, as
prices have been below the expectation of many stockholders, who
have been reluctant to sell.
"The backwardation is not due to a pickup in copper demand,
but a supply tightness due to a reluctance by stockholders to
sell. The May import figures were high but I suspect most of
them haven't left the bonded warehouses yet," said an executive
with a major copper producer.
The current front-month June contract traded 610 yuan higher
than the third-month August contract and 1,020 yuan higher than
the sixth-month November contract.
"Volumes of draw downs from Shanghai's bonded warehouses are
still low, but have increased from earlier months thanks to an
improved LME-ShFE arbitrage," said a Qingdao-based trader.
On technical charts, LME copper looks set to drop to $7,219
per tonne, said Reuters analyst Wang Tao who added that he saw a
resistance at $7,424.
Shanghai copper will revisit its June 4 low of
52,700 yuan per tonne, he added.
LME copper's 50-day moving average has also fallen under its
200-DMA since late last week, forming a bearish technical signal
called a "death cross", which many traders see as a cue to sell.

Base metals prices at 0721 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7382.50 -37.50 -0.51 -2.86
SHFE CU FUT SEP2 53740 -610 -1.12 -3.40
LME Alum 1973.00 0.50 +0.03 -2.33
SHFE AL FUT SEP2 15865 -60 -0.38 0.16
HG COPPER JUL2 332.90 -1.40 -0.42 -3.11
LME Zinc 1885.00 -5.00 -0.26 2.17
SHFE ZN FUT SEP2 14760 -125 -0.84 -0.24
LME Nickel 17154.00 -171.00 -0.99 -8.32
LME Lead 1905.00 -9.00 -0.47 -6.39
SHFE PB FUT 14940 -150 -0.99 -2.29
LME Tin 19575.00 75.00 +0.38 1.95
LME/Shanghai arb 1073

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
($1 = 6.3694 Chinese yuan)
($1 = 0.7993 euros)

(Reporting by Carrie Ho; Editing by Clarence Fernandez and
Miral Fahmy)