LONDON, Feb 25 (Reuters) - Copper fell on Thursday as investors grew cautious about recovery prospects after digesting Fed Chairman Ben Bernanke's comments, and as the dollar rose versus the euro on renewed worries over Greece's debt.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $7,080 a tonne in official rings from a close of $7,155 on Wednesday.
Bernanke pledged on Wednesday to keep interest rates low, giving copper and other risky assets a brief boost. However, tandem remarks about an uncertain economic recovery began to knock sentiment on Thursday.
A report on U.S. new home sales on Wednesday highlighted Bernanke's predicament. Sales slumped more than 11 percent to a record low, suggesting the sector, at the epicentre of the financial crisis, had yet to fully heal.
"The market is very nervous about what's going on in the global economy. This trough we see lately in the euro-dollar could continue. People are nervous Europe will be left behind in this recovery," said Arne Rasmussen, analyst at Danske Bank.
Investors are eyeing a second day of testimony by Bernanke, to get more clues to assess the economic recovery.
A stronger dollar also weighed on metals, making them more expensive to buy for investors holding other currencies.
The euro traded near a nine-month low versus the dollar on Thursday, undermined by Standard and Poor's comments on Wednesday that it may cut Greece's BBB+ rating by one or two notches within a month.
"People see that there's no obvious solution to this issue, it could dent the outlook for the economy in Europe," said Rasmussen. But he added he remains optimistic on copper longer term as supply will be tight when non-China demand recovers.
Latest LME data showed copper stocks fell 2,450 tonnes to 550,225 while cancelled warrants -- material earmarked for delivery out of warehouses -- rose to 16,600 tonnes versus 14,000 tonnes.
Copper prices have taken some support in recent weeks from rises in cancelled warrants, which investors believe could indicate demand is finally starting to recover outside China, as anticipated last year.
CHINA WORRIES
In China, however, worries over potential rate hikes coupled with an absence of strong Chinese buying after the week-long Lunar New Year holidays last week, is undermining copper.
"In 2010 it's unrealistic to expect China to support copper prices. Demand from Europe and the U.S. has to improve. Copper consumption in China is likely to grow at a slower pace from last year," said Liu of China International Futures.
On Wednesday, data showed refined copper imports from top consumer China fell to 196,926 tonnes in January, from 244,013 tonnes in December. Record imports from China last year helped copper surge 140 percent.
Among other industrial metals, aluminium traded at$2,090.50 a tonne in rings from $2,137.
LME data showed stocks fell 4,000 tonnes to total 4.58 million tonnes. Much of the stock remains tied up in financing deals, meaning there is not much available for consumption, especially with cancelled warrants on the rise.
Zinc traded at $2,168 a tonne from $2,204, while battery material lead traded at $2,165 from $2,215.
Ivernia Inc said on Thursday it will restart its Magellan mine processing plant and that it expects to produce 60,000 tonnes of lead in concentrates in 2010.
Tin traded at $16,925 from $16,975, and nickel at $20,325 from $20,470. Metal Prices at 1339 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 318.00 -5.60 -1.73 332.75 -4.43 LME Alum 2082.00 -55.00 -2.57 2230.00 -6.64 LME Cu 7038.00 -117.00 -1.64 7375.00 -4.57 LME Lead 2154.00 -61.00 -2.75 2432.00 -11.43 LME Nickel 20250.00 -220.00 -1.07 18525.00 9.31 LME Tin 16725.00 -250.00 -1.47 16950.00 -1.33 LME Zinc 2156.00 -48.00 -2.18 2560.00 -15.78 SHFE Alu 16840.00 10.00 +0.06 17160.00 -1.86 SHFE Cu* 57890.00 -280.00 -0.48 59900.00 -3.36 SHFE Zin 18275.00 -105.00 -0.57 21195.00 -13.78 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
