LONDON Copper hit a four-month low on Tuesday, shrugging off upbeat German growth data, as other EU economies contracted, the euro fell and concerns over slower growth in China and a political stalemate in Greece kept prices in check.
Benchmark copper on the London Metal Exchange closed at $7,760, from a close of $7,775 on Monday. Earlier, the metal used in power and construction hit a session low of $7,732 a metric ton (1.1023 tons), its lowest since January 12.
The euro zone narrowly avoided recession in early 2012, according to data from the EU's statistics office Eurostat, but the region's debt crisis sapped the French and Italian economies and widened a split with powerhouse Germany.
The Netherlands and the European Union's emerging eastern states also showed an economic contraction.
"Today it's very much about the macro environment, about political uncertainty in the euro zone," said Gayle Berry, an analyst at Barclays Capital.
Sales at U.S. retailers barely rose in April as the boost from an unseasonably warm winter faded, pointing to some loss of momentum in consumer spending early in the second quarter.
The euro fell to a four-month low, despite German economic growth beating expectations, as the political stalemate in Greece stoked concerns Athens may renege on bailout pledges and exit the currency bloc.
A weaker U.S. currency makes dollar-priced commodities such as base metals cheaper for holders of other currencies.
Also weighing on sentiment, ratings agency Moody's has lowered its long-term debt and deposit ratings for 26 Italian banks, citing the country's recession and rising bad debt levels, and said they could be cut further.
"For as long as sentiment among market players remains generally negative, metals can also be expected to remain under pressure," Commerzbank said in a note. "That said, we should see increased buying interest and opportunistic behavior among market players as prices fall below or come close to psychologically important thresholds."
A slowdown in China is also weighing on investors' minds, with Beijing's weekend move to cut banks' reserves to spur lending seen as an affirmation that the world's No. 2 economy and top copper consumer is weakening further.
"Investors are also waiting for conclusive data suggesting whether China is turning the corner; for metals a bigger than expected slowdown in growth in China is really a main concern," Berry said.
China consumes about 40 percent of the global copper supply.
But Matt Fusarelli, analyst at Australia-based consultancy AME Group believes China will remain a key support factor for the market.
"We are quite positive on the copper market because so much of it is going into electrification projects in China and these are going to be sources of demand which transcend any pocket of weakness," he said.
"The world has to get around the idea that China will not continue to grow at double-digit rates every single year. These growth rates are going to slow and that means copper and raw material demand will slow in percentage terms."
China's copper imports fell nearly 19 percent to an eight-month low in April, while its output of refined copper for the same month fell for the first time since January.
Fundamentally, a sustained premium in LME cash copper over three-month material still points to tightness in immediate supply, which should be supportive of prices. But the backwardation has eased to $43 a metric ton from this year's high of $149 at the end of April, the steepest since August 2008.
Tin closed at $19,810, from its $20,050 close on Monday while zinc ended at $1,934 from $1,920.
Battery material lead closed at $2,008.5 from $2,035.50 and aluminum closed flat at $2,025. Nickel closed at $16,995 from $16,875.
(Additional reporting by Manolo Serapio in Singapore; editing by Keiron Henderson)