Benchmark copper on the London Metal Exchange was up to $9,045.50 a tonne by 0936 GMT, paring losses after falling nearly 1 percent to $9,005 in the last session. The metal used in power and construction was still more than 10 percent down from Feb. 15, when it hit a record high of $10,190 a tonne.
"The dollar is down as the broader market still thinks we will see some help for Greece and that kind of helps (copper)," said VTB Capital analyst Andrey Kryuchenkov. The euro clung to small gains against the dollar as market players bet the euro zone will cobble together measures to prevent Greece from defaulting on its debt, though its advance could stall ahead of a confidence vote on the government in the Greek parliament.
A softer US currency makes dollar-priced commodities more affordable for holders of other currencies. "We hope that Chinese demand will increase in the second part of the year but until we see premium prices significantly up copper will not trade much higher," Kryuchenkov added.
Data showed that arrivals of refined copper in top consumer China dropped 6.9 percent in May to a 30-month low after falling 16.6 percent in April on ample domestic stocks.
"Chinese imports went down as expected because the refined domestic production was on the rise, stocks were very high and the arbitrage (Shanghai-London) was closed," Kryuchenkov said, adding trading volumes were low as investors were unwilling to take positions given the uncertainties about both the copper demand prospects and the debt crisis in Greece.
Investors were eyeing data on US existing home sales for May which will be posted at 1400 GMT and could give the market some direction.
A 6.3 magnitude earthquake struck copper-rich northern Chile on Monday, but there were no reports of damage at major mines and authorities reported no injuries or risk of tsunami.
STRONG PRICING
Inventories of copper in the London Metals Exchange rose to 472,825 tonnes but were 1.3 percent down from Jun. 9, when they hit a more-than-one-year high at 477,925 tonnes. "We expect inventories... to decline throughout (the third quarter), supporting historically strong pricing," said RBC capital in a note.
"We forecast a deficit in 2011 for a second year in a row and for inventories to finish the year below critical levels."
Aluminium was trading at $2,543.50 from $2,531 at the close on Monday.
The metal used in packaging and transport fell by about 10 percent since May 3, when it hit a 9-month high of $2,803 but was still more than 2 percent up from the beginning of this year.
"We think that the recent drop in aluminium prices relates to economic uncertainties due to the Greek debt crisis and (higher) oil prices, but we think that this is just a temporary blip," said Kamil Wlazly, metals analyst at MetalBulletin Research, adding he expected aluminium prices to rise to $2,650 in the third quarter as fundamentals remained supportive. Zinc, used in galvanizing steel was at $2,198 from $2,172 Monday's close.
Battery material lead was at $2,459 from $2,450 and tin was at $25,100 from $24,800. Nickel was at $21,805 from $21,650.
Copyright Reuters, 2011