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Copper eased more than 1 per cent early on Monday, as China returned after a week long New Year holiday in a downbeat mood while concerns about further monetary tightening in the world's largest metals consumer also weighed.
By 1102 GMT, copper for three month delivery on the London Metal Exchange traded at $7,365 (U.S.) a tonne from $7,435 at the close on Friday and compared with a session low at $7,315.
"Today is the first trading day for the Shanghai futures exchange after being closed for the whole of last week," said Herwig Schmidt, head of sales at Triland Metals. "Shanghai (copper) ended up only about $50 higher than LME (and) before the holidays it was around $120-$130.
"Maybe people would have thought China would have been a bit stronger."
Shanghai's benchmark third-month copper futures hit a 4-week high of 60,000 yuan in early trade but ended at 59,010 yuan a tonne.
China's key stock index closed down 0.49 per cent on Monday in thin volume, led by banks, after a week-long break as investors digested Chinese and U.S. monetary policy moves and activity on global markets.
Copper prices on the LME gained 9 per cent last week - the biggest weekly rise since March last year - and touched a 3-1/2-week peak of $7,450 a tonne on Friday, encouraged by an improving economic outlook.
China's central bank announced an unexpected increase in banks' required reserves after the market closed on Feb. 12, while the U.S. Federal Reserve raised its discount rate last week.
Chinese buying, combined with a weaker dollar, fund buying and improving economic data, helped copper gain 140 per cent last year.
But rising stocks levels have helped weigh on industrial metal prices in 2010, highlighting that demand outside China remains weak.
Copper LME stocks rose 250 tonnes, near levels not seen since October 2003 at 555,025 tonnes.
Aluminum traded at $2,133 versus $2,139. LME stocks for the metal used in transport and packaging, slipped 7,275 tonnes to remain near record levels at 4.59 million tonnes.
A large portion of those aluminum stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.
Analysts are currently looking at rises in cancelled warrants - tied to metal already earmarked for delivery from LME warehouses - for indications on the demand outlook.
On Friday, aluminum cancelled warrants were at 302,025 tonnes, compared with 243,175 tonnes on Jan. 19.
Also offering optimism, United Company Rusal Plc, the world's largest aluminum producer, said it plans to increase aluminum and alumina output in 2010 as economic development in China and India is expected to boost demand.
"Aluminum has the lowest downward potential at the moment," said Eugen Weinberg, an analyst at Commerzbank. "It is still being supported by outflows from inventories in cancelled warrants, and by high energy costs."
"(But) the market is very negative on aluminum ... we have 4.5 million tonnes on LME inventories but it's only half of the story - the other half is in outside inventories."
In other base metals, steel making ingredient nickel traded at $20,660 from $20,725 while battery material lead was at $2,345 from $2,359.
Zinc traded at $2,331.50 a tonne from $2,360 and tin was at $17,000 from Friday's last bid at $16,995.
Also on investors' radar, the LME launched its new molybdenum and cobalt futures on Monday, the first time that the two minor metals will trade an exchange.