Copper initially jumped early on Wednesday following news that US President Barack Obama won a second term, fuelling hopes Washington would continue with economic stimulus measures, but focus has turned to the US fiscal cliff of tax hikes and spending cuts which raise concerns about the economic outlook.
Three-month copper on the London Metal Exchange slipped to $7,585 a tonne at 1026 GMT, down 0.3 percent from Wednesday's close of $7,610. Copper had fallen to a two-month low at $7,563.25 a tonne during yesterday's session.
"There was a brief euphoria after Obama's re-election but now we have gloom over the US fiscal cliff and uncertainty over the leadership change in China which is also impacting sentiment," said Citi analyst David Wilson.
Copper is trading 0.2 percent lower in the year to date. Strong gains in September, following US quantitative easing measures, have dissipated as jitters about the outlook for global growth weighs on metal demand.
"We could see some interesting moves in the metals space due to index rebasing towards the end of the year, and we might see a bit of a bounce in base metals prices," Wilson said.
"But through November it is difficult to see what is going to move prices significantly higher or significantly lower. We see bits and pieces of consumer buying at lower numbers but sentiment is not particularly positive at the moment."
The euro slipped to a two-month low against dollar, ahead of a European Central Bank rate decision. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies.
The ECB is widely expected to leave interest rates on hold at its meeting later on Thursday but comments by President Mario Draghi on the weak outlook and gloomy forecasts from the European Commission have raised speculation it may signal more willingness to ease in future.
Reinforcing the downbeat sentiment, data showed German exports slid at their fastest pace since late last year and imports also fell in September, adding to evidence that the euro zone crisis has begun to inflict a heavy toll on the currency bloc's largest economy.
CHINA LEADERSHIP TRANSITION
Investors are eyeing China's once-a-decade leadership transition event, the 18th Party Congress, which opened on Thursday, for hints on any imminent stimulus measures or future policy direction that may affect metals demand.
"So far, the content of speeches from the 18th Party Congress has been within expectations.
There hasn't been anything particularly encouraging to investors," said Orient Futures derivatives director Andy Du.
Analysts also warned that supplies of copper concentrates are growing at a rate that may eventually cause a jump in global refined copper inventories.
"The third quarter jump in Chilean copper concentrates exports and the continued rise in China's copper concentrates production would eventually push refined global copper output up," research firm Minmetals Futures said in a note.
"Much of the excess supplies may end up in ShFE warehouses. They may also end up in LME Asian warehouses through Chinese smelters that are able to export copper under discounted duties if they booked these under their tolling book.
In other metals, aluminium slipped to $1,913.25 from Wednesday's close of $1,920 while lead eased to $2,173 from $2,176.
Tin was at $20,350 from $20,300, nickel fell to $15,959 from $15,995 and zinc was at $1,907.75 from $1,896.