NEW YORK, Jul 21, 2011 (Dow Jones Commodities News via Comtex) --Copper ended lower as weak economic data in Europe and China dimmed investor sentiment, while a draft deal to aid Greece failed to soothe concerns that Europe's debt crisis was spreading.
 
The most actively traded contract, for September delivery, settled down 5.25 cents, or 1.2%, at $4.3835 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded July-delivery copper fell 5.10 cents or 1.25, to settle at $4.3775 a pound.

Markit Economics said its preliminary composite purchasing managers index fell to 50.8 from 53.3 in June, a reading above 50 indicates expansion.

"The macro economic data was rather downcast, with the euro zone manufacturing coming in weakest in two years," said Justin Lennon, base metals analyst with Mitsui Bussan Commodities.

Copper is widely used in manufacturing for its electrical conductivity, heat transference and rust resistance properties and is used in making everything from iPhones and air-conditioners to cars.

A more extreme slowdown was signaled by the HSBC China manufacturing initial Purchasing Managers' Index, which fell to a 28-month low of 48.9 in July from a final value of 50.1 in June. A reading below 50 indicates contraction in manufacturing activity.

China is the world's largest consumer of copper, accounting for around 30% of global demand.

The HSBC data is known as China's unofficial PMI, however, and traders must wait for the government data, due at the start of August, to confirm the trend.

"In view of the evident inflation dangers, the central bank and government may also decide to take further tightening measures shortly. This is likely to hinder a further rise in metal prices," said analysts at Commerzbank.

A draft proposal to extend more financial aid to Greece and help the euro-zone member avoid default was met with little elation in the copper market. Euro-zone leaders put forward a draft proposal of financial aid for Greece following a meeting in Brussels. The deal provides lower lending rates to Greece and a wide range of options for private-sector creditors to help the debt-laden country.

"This is not the first time a deal's been done to save Greece from default. Euro-zone leaders may be lacking in credibility in investors' minds," said Matt Zeman, head of trading at Kingsview Financial.

Investors are less willing to put their money into risky assets like commodities, including copper futures, when the threat of a global financial crisis is high.

Copper settlements (ranges include electronic and pit trading):
Jul $4.3775; down 5.10 cents; Range $4.3740-$4.4410
SEP $4.3835; down 5.25 cents; Range $4.3650-$4.4595