Copper firmed a little on Thursday after sinking to a 4-1/2 month low in the previous session but remained under pressure as downbeat data from the European Union raised worries that global economic weakness will hit demand for industrial metals.
Benchmark copper on the London Metal Exchange was trading at $7,589.50 a tonne by 0939 GMT, 0.8 percent up from a close at $7,531 on Wednesday.
The metal, used in power and construction, has dropped on risk aversion triggered by worries about Greece's possible exit from the euro zone.
Business surveys showed Germany's manufacturing sector has been shrinking at the fastest rate in three years in May and the euro zone's private sector has sunk further into the doldrums this month as new orders shrivel, forcing firms to run down backlogs and slash workforces.
German business sentiment also dropped for the first time in seven months in May, missing even the most conservative forecasts, in a sign Europe's largest economy is vulnerable to euro zone turmoil despite holding up well until now.
The economic data we had from Europe was terrible and wiped out any positive momentum we had earlier due to pretty aggressive policy stimulus being rolled out in China, said Credit Suisse analyst Ivan Szpakowski.
I think it's very difficult to sustain any rally until we have got any more news from Greece, and the risk is clearly on the downside.
Chinese Premier Wen Jiabao said on Wednesday the country will step up policy fine-tuning to support the economy, the latest signal that Beijing will take further action to fight slowing growth.
Nonetheless China's factories faltered in May as export orders fell to two month lows, a private sector survey showed, suggesting surprise weakness in April's hard economic data persists.
Putting further pressure on base metals, the euro hit a near two-year low against the dollar after the dire German economic data.
A stronger U.S. currency makes dollar-priced commodities such as base metals costlier for holders of other unit.
Copper is on track for a 10 percent loss this month, its weakest monthly performance since October 2011, when fears of a double-dip recession and growing doubts about a resolution of the Europe debt crisis sent the metal down almost 25 percent.
Still, strong U.S. housing data lent some support to industrial metals.
The U.S. spring home-selling season got off to a strong start in April, with rising sales and prices providing evidence that a housing market recovery was gaining some traction.
Supply also remains limited for copper as miners struggle to boost production while grades fall and labor disputes regularly disrupt production.
The world's top copper producer, Chile's Codelco CODEL.UL for example, said its output fell 10 percent in the first quarter from a year earlier to 373,000 tonnes, but added that it was on target to produce 1.708 million tonnes this year.
In other metals, aluminum was at $2,012.75 from a close at $2,010 on Wednesday.
China's top aluminum-producing province has idled about 700,000 tonnes of capacity in recent months, a senior industry official said, further evidence that slower growth in the world's No. 2 economy is denting the country's appetite for commodities.
Adding to the Chinese cutbacks, Norsk Hydro (NHY.OL) will shut its 180,000-tonnes-per-year aluminum smelter in Australia due to low metals prices and a dismal economic outlook, the latest producer to take steps to stem losses.
When aluminum falls to these prices we start to see more and more cutbacks in production and we could see further shutdowns, Szpakowski said.
Zinc, used to galvanize steel was at $1,875.75 from $1,879 Wednesday's close.
LME zinc stocks in LME-monitored warehouses fell slightly from a 12-year high hit earlier this week.
Nonetheless there is little chance of any trend reversal in zinc stocks, which have risen by 30 percent since mid-December, for a sharp increase in supply is set to generate a market surplus of 250,000 tonnes this year, Commerzbank said in a note.
Battery material lead was at $1,939 from $1,929 .
Tin was at $19,565 from $19,525 and nickel was at $16,946 from $16,755.