Sep 13, 2011 NEW YORK (Dow Jones)--Copper futures posted modest gains Tuesday as a weaker dollar and stronger equities briefly tempered long-running concerns about Europe's debt problems.

The most actively-traded contract, for December delivery, settled up 0.45 cents, or 0.1%, at $3.9700 a pound on the Comex division of the New York Mercantile Exchange.

Copper for September delivery rose 0.55 cents, or 0.1%, to settle at $3.9560 a pound.

German Chancellor Angela Merkel sought to soothe concerns about Europe's government debt problems and worries that euro-zone member Greece could default on its debts. While Germany is committed to helping Greece through previously announced measures, there are no quick-fix solutions to the region's problems, Merkel said.

"It will be a very long, step-by-step process," she said.

Europe's sovereign debt crisis had capped copper's record-breaking rally earlier this year as concerns about slower growth and lower demand for the metal permeated the market. Copper is used to make everything from TV sets to refrigerators and tractors, and demand for such products erodes when the economy falters.

"The markets are still extremely nervous," said traders at Sucden Financial.

A weaker dollar helped copper carve out modest gains on the day. The ICE Dollar Index was recently down 0.4% at 76.884.

Meanwhile, benchmark U.S. stock indices were slightly higher with the benchmark Standard & Poor's 500 index recently up 7.65 points, or 0.7%, at 1170.92. Copper futures have been moving in the same direction as stocks for much of the past month, with the 30-day average correlation between the two at positive-0.8 on a scale where positive-1 represents a perfect direct relationship.

However, the copper settled near the day's lows which is seen as a negative sign by technical traders, said Sterling Smith, analyst with Country Hedging. "If we trade below $3.9500 tomorrow we will have formed a very bearish pattern that would indicate further drops in the market," Smith said.

"Copper really needs some good economic news," he added.

Such uplift may come Wednesday, when the U.S. reports its producer price index and retail sales for August. Producer prices are a measure of inflation, and are expected to be unchanged in August versus a 0.2% increase in July, while retail sales indicate consumer demand for everyday goods and are seen rising 0.3%, compared to 0.5% the prior month.

Meanwhile, U.S. business inventory data for August is expected to show an increase of 0.6% for July as business beef up their stocks ahead of the back-to-school season.

Copper prices are sensitive to economic data as the industrial metal is widely used in consumer goods.

Copper settlements (ranges include electronic and pit trading):
Sep $3.9560; up 0.55 cents; Range $3.9470-$4.0065
Dec $3.9700; up 0.45 cents; Range $3.9550-$4.0245