Copper fell on Tuesday as the dollar rose and euphoria in financial markets over a bank bailout for indebted Spain waned.
Spain's financial turmoil and the possibility of Greece leaving the single currency area have thrust fears of euro zone debt contagion back into the limelight. A shaky European economy would erode demand for industrial metals used in construction and manufacturing.
Three-month copper on the London Metal Exchange was $7,395 a tonne in official rings from $7,420 at the close on Monday, when it rose 1.7 percent.
Not even brisk imports of key commodities into China, the world's largest buyer of copper, and a surprise recent interest rate cut by Beijing, could enthuse the metals market.
It's not so much the fundamentals that are driving the prices but the concerns, the fears and the psychological factors, Commerzbank analyst Eugen Weinberg said.
It doesn't mean that the current situation is as bad as the market suggests, but it may deteriorate further on sentiment.
Weinberg sees copper prices reaching a floor in July and August, before the market refocuses on fundamentals and China and Western central banks possibly launch more measures to stimulate their economies.
In the meantime, concerns that the Greek election on June 17 would return parties opposed to its current bailout plan and force a disorderly exit from the euro zone were rekindled by a report that EU officials were considering ways to manage the fallout.
The euro was volatile versus the dollar, with wary investors awaiting the outcome of Sunday's Greek election.
A stronger dollar makes commodities priced in the unit more expensive for holders of other currencies.
Due to the lack of technical momentum, we think sideways trading will be the most likely outcome ahead of the Greek elections, Credit Suisse said in a research note.
Crude oil futures fell towards the year's low and gold eased below $1,590 per ounce.
Tin was $19,600 per tonne in rings, up from $19,500 at Monday's close, while zinc was $1,882 from $1,890.
Lead was $1,905 from $1,914 and aluminum was $1,966 from $1972.5. Nickel was $17,150 from $17,325.