Despite the positive finish, copper prices fell for a third straight month in May, hit by a severe shakeout in other commodities like silver and crude oil in the first two weeks of the month that rattled investor confidence and failed to allow prices to fully recover.

But that sell-off presented investors with a new opportunity to re-enter the market or add length to existing positions. Prices responded to end just a hair below the levels seen in late April.

"Everybody is just chasing yield. The risk premium goes in and out of the market. When people get a little bit jittery they sell their positions and then they jump right back in when they feel things have settled down," said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.

"All-in-all, looking at everything that we digested this past month, we're not too bad."

London Metal Exchange (LME) benchmark copper peaked at $9,278.50 a tonne, its highest since May 4, before ending the day up $21 at $9,220.

In New York, prices failed to match the earlier overseas strength. The July COMEX copper contract backed away from its own four-week high to end down 0.85 cent at $4.1775 per lb.

Copper's inverse relationship with the dollar aided in the metal's steadier start to the week, analysts said.

"It's a combination of investors looking for return wherever they can get it to beat inflation and it's a reaction to the US dollar," Great Pacific Wealth's McGillivray said.

The euro hit a three-week high against the dollar on Tuesday after a report said Germany could make concessions on efforts to put together a bailout for Greece, helping to ease fears over a Greek debt restructuring.

With renewed depreciation in the dollar offering support, investors were able to look past weak US data that showed a double-dip in home prices, pessimistic consumers and a slowdown in regional manufacturing.

End of month trading was also seen lending some support, said analyst Robin Bhar of Credit Agricole. "Today we've got trading for the last day of the month, so month-end window dressing I suspect is keeping things firm."

Additional underpinnings were tied to news that copper output in Chile, the world's top producer, fell 3.9 percent in April compared with a year earlier to 438,340 tonnes.

Chile is the world's largest producer of copper, accounting for around one third of total global production.

CHINA POWER

Lending support to LME aluminum was news that China had raised its electricity prices for some users, which Barclays Capital said could affect at least 28 percent of smelters in the world's top aluminum-producing nation.

"This increase in power prices will put further upward pressure on the production costs of an industry and a country where marginal production costs are already at a record high," it said in a research note.

LME aluminum stocks fell 3,525 tonnes to 4,699,300 tonnes, off a record high of 4.71 million tonnes. But canceled warrants, metal tagged for future delivery from warehouses, jumped by more than 50,000 tonnes, mostly in Singapore.

Aluminum hit its own four-week high of $2,682 per tonne, before closing up $52 at $2,677.

Lead was untraded at the close, but last bid at $2,521 a tonne from $2,505 a tonne.

China plans to phase out battery-powered e-bikes that exceed

speed and weight limits published 12 years ago, a move that could force small manufacturing plants to close and cut demand for lead there.

Copyright Reuters, 2011