The red metal trimmed losses late in the session as equities rebounded and the euro recovered against the dollar.
An optimistic tone had set in across many risk asset markets like industrial metals in recent days, as investors believed European officials at the summit on Friday would craft a bold plan to deal with the crisis. French officials had even said French and German leaders will not leave the summit until a "powerful" deal was reached.
But a senior German government official on Wednesday said Berlin was growing more pessimistic chances for such a deal.
"This is a very, very difficult path that the European politicians are trying to walk down, and we're a long way away from the end point," said Natixis analyst Nic Brown.
The euro zone debt crisis has been the biggest concern for commodity investors this year, weighing on the global demand outlook and dragging copper down 19 percent this year and 23 percent off a record $10,190 per tonne and $4.60 per lb reached in February.
London Metal Exchange (LME) benchmark copper eased $15 in another light-volume day to close at $7,820 a tonne. (Copper volume graphic: https://link.reuters.com/cuw45s )
In New York, the key March COMEX contract fell 1.95 cents to settle at $3.5560 per lb, after dealing between $3.5215 and $3.6145.
Futures volumes stood at nearly 40,000 lots in late New York business, about a third below the 30-day norm, according to preliminary Thomson Reuters data.
Copper was up about 1 percent earlier in the session as investors grew optimistic for an interest rate cut on Thursday from the European Central Bank (ECB), which would boost liquidity in the banking sector and calm markets.
On the supply side, a 12.4 percent increase in the fees Freeport-McMoRan Copper & Gold will pay smelters in 2012 to process its ore may pave the way for higher benchmark prices next year by eroding the bargaining power of other global miners, a CRU consultant said Wednesday.
"We find ourselves optimistic (on copper) on a six- to nine-month horizon, but concerned that there are clearly some short-term risks, not just in Europe but clearly in the situation in China."
CHINA WEAKNESS
Europe's debt crisis has also added to concerns about an economic slowdown in China, a leading exporter to the region and the top consumer of copper accounting for about 40 percent of global consumption.
China's annual rate of export growth slowed in November versus October, Vice Commerce Minister Chong Quan said, confirming market expectations that deteriorating external conditions are dragging on the world's No. 2 economy.
Inventories of copper in Asian warehouses monitored by the LME and in warehouses monitored by the Shanghai Futures Exchange have been falling in the last few months, but the pace of withdrawals has slowed recently, pointing to a decline in spot demand from Asia.
Chinese importers cut purchases of copper in bonded warehouses in Shanghai this week because of weaker domestic demand, caution over prices and slower processing by local customs offices, traders said on Wednesday.
Tin stocks, on the other hand, continued to see significant outflows, pointing to increasing demand for the metal used for soldering.
Inventories of tin in LME-monitored warehouses fell below 12,000 tonnes, their lowest since April 2009 and almost 50 percent down from last August.
"We attended ITRI's inaugural Investing In Tin seminar ... Presentations on the market outlook highlighted that supply is still constrained," Macquarie said in a note.
"In the short term, more supply can come only from Indonesia, and this will be subject to higher prices than prevail today in what is a deficit market."
Tin closed at $20,500. It was untraded at the close on Tuesday but bid at $20,300.