Copper eased on Monday on concerns an 85 billion euro ($112.6 billion) bailout for Ireland could herald more debt problems in Europe, although losses were limited by expectations of tightening supply. Three-month copper on the London Metal Exchange ended at $8,220 a tonne, versus a close of $8,239 a tonne on Friday, after hitting a low of $8,175 earlier.
"There is clearly a lot of macro chaff floating around," said Daniel Major, an analyst at RBS Global Banking & Markets. "First thing in the session, the Irish bailout supported risk appetite, but since then we've seen it deteriorate a little bit and a stronger dollar (has emerged)."
Copper reversed earlier gains as the euro touched two-month lows versus the dollar and European shares fell, while investors looked past a rescue package for Ireland to debt problems in other peripheral eurozone economies. A rising dollar makes metals costlier for non-US investors.
"(Prices) have been dragged back by the stronger dollar and also the weaker equity market," said Eugen Weinberg, an analyst at Commerzbank. "Because the market is telling us, especially the equity market, that the European problems are far from over." On the supply side, union leaders at the world's No 3 copper mine, Chile's Collahuasi, on Monday prepared to open wage talks with management, which both sides hoped could end a three-week strike after workers shunned a previous offer.
Government data from Chile showed that copper output in the world's No 1 producer sank 7 percent against October 2009. Longer term, copper prices looked underpinned by signs of tightness growing in the market. Underlining this, LME stocks have fallen steadily since February, last down 450 tonnes to 356,550 tonnes - their lowest since October 2009. Also pointing to market tightness, the cash to three-month spread on LME copper stood at a premium of $52 a tonne, its widest backwardation since October 2008.
Investors also kept an eye on a recent dominant position controlling 50-80 percent of cash warrants for both copper and nickel, subject to LME lending guidance. Sentiment was fragile as investors fretted about potential further monetary tightening measures in China, which could impact demand from the world's top metals consumer.
China recently raised cash reserve requirements for banks, the second such move in a fortnight, stepping up its battle to tame inflation by locking up cash. Elsewhere in Asia, Japan's refined copper exports fell 7.9 percent in October from a year earlier to 36,102 tonnes, with 43 percent of that going to China, Ministry of Finance data showed on Monday.
Aluminium was untraded at the close but last bid at $2,270 a tonne, from a close of $2,270 a tonne on Friday. Rio Tinto, the world's biggest aluminium producer, on Monday warned large inventories of aluminium amassed during the global financial crisis were weighing on the outlook for the commodity over the next few years. Zinc ended at $2,078 a tonne from $2,105. Japan's refined zinc exports for October fell 18 percent from a year earlier to 8,520 tonnes for a tenth straight month of declines, but the drop was smaller than September's 39 percent slide, Ministry of Finance data showed. Battery material lead closed at $2,188 a tonne in rings from $2,275. Tin ended at $23,900 a tonne from $24,100 a tonne. Nickel closed at $22,400 a tonne from $22,550.