SHANGHAI: Copper fell on Tuesday, struggling to define a new technical range, as investors stayed cautious after Italy's five-year bond yields rose to a record euro-era high, fuelling fears that high borrowing costs would hamper the nation's efforts to trim its debt.
Three-month copper on the London Metal Exchange inched down 0.04 percent to $7,756.75 a tonne by 0402 GMT, after rising 1.6 percent previously.
The most-active January copper contract on the Shanghai Futures Exchange fell 1.6 percent to 57,500 yuan ($9,049.70) per tonne, as investors took profits after the contract shot up 5.1 percent on Monday.
"London copper and Shanghai copper were trading in different directions earlier today, revealing a period of consolidation where the contracts are trying to eke out a new technical range," said CITIC Newedge trader Eric Liu.
"The flip-flopping in sentiment over the euro zone has led to a lack of trading direction. Berlusconi's resignation was seen as a great positive, but last night's spike in Italian bond yields and Germany's suggestions for voluntary exits from the euro zone dented confidence again," Liu added.
Italy paid a euro-era high price to sell five-year bonds on Monday, with investors wary of buying its debt until the country's new leadership undertakes profound economic reform.
German Chancellor Angela Merkel said on Monday Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.
Greece's conservatives vowed on Monday to reject any new austerity measures in return for the aid that is keeping Athens from bankruptcy, signalling a new coalition government may not enjoy the kind of cross-party support its lenders demand.
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