LONDON, Jun 20, 2011 (Dow Jones Commodities News via Comtex) -- Base metals closed mostly lower on the London Metal Exchange Monday as investors continued to eye debt-laden Greece, although the metals had trimmed earlier losses significantly after a recovery in the euro and rise in U.S. stock markets.

LME three-month copper closed at $9,000 a metric ton--down 1% on the day, however well higher than its intraday low of $8,900/ton. LME three-month aluminum meanwhile finished the session at $2,530/ton--down 0.5%, but much stronger than its earlier low of $2,516.25/ton.

The rebound was spurred by a recovery in the euro, which rose after the head of the Eurogroup of finance ministers Jean-Claude Juncker said support for the euro zone's most fragile economies will be increased in the form of a larger European Financial Stability Facility, the region's bailout fund.

U.S. stocks, which tend to benefit from improved risk sentiment similarly to the base metals, also firmed after a pledge by European leaders to head off a Greek-debt default.

Investors are, though, still reluctant to significantly increase their exposure to the industrial commodities, particularly before a financial aid package for Greece is confirmed, market participants said. Nickel and lead were the only base metals to close the open outcry session higher.

The International Monetary Fund Monday warned the debt crisis in the euro zone's periphery is threatening to "overwhelm" the region's economic recovery and may cause a global financial disruption if leaders fail to take decisive action to stop contagion. 

The euro-zone's sovereign debt situation has become a key driver for metal prices as risk appetite fluctuates and investors attempt to gauge its ultimate impact on the regional and global economy, and subsequently metal demand. Base metals are used widely in manufacturing and construction, so are sensitive to economic developments.

"There are two views on where copper is heading, and I am of the less optimistic one," a London-based trader said. "Greece has become the focus, but look at the rest of Europe and the Western world and see the massive problems we have--I don't know how some people can push it under the carpet and forget about it," he added.

However, MF Global analyst Edward Meir expects the Greek government to survive a vote of no confidence and to pass an austerity budget, paving the way for a new aid package for the indebted country.

This would allow the commodity markets "to breathe a little easier and stage a respectable bounce on account of a possibly stronger euro," he said, adding investors may therefore "not want to get too short here in light of such a possibility."

Prices in dollar a metric ton.
3 Months Metal                Bid-Ask      Change from
                                                               Friday PM kerb
Copper                         9000.0-9005.0     Dn 94
Lead                              2450.0-2451.0     Up 1
Zinc                                2171.5-2172.5     Dn 16.5
Aluminum                   2530.0-2531.0     Dn 13
Nickel                          21650.0-21675.0    Up 50
Tin                                 24795.0-24800.0    Dn 205
Aluminum Alloy             2335.0-2340.0     Dn 15
Aluminum Alloy-NASAAC      2505.0-2510.0     Up 5