SHANGHAI, May 23 (Reuters) - Copper retreated on Wednesday from a one-week high hit in the previous session ahead of a meeting of European leaders, with investors wary that a failure to tackle the region's debt crisis will hit global demand for industrial metals just as China is slowing and a U.S. recovery is fragile.
There are nagging fears of a messy Greek exit from the euro zone as well as concerns over contagion after ratings agency DBRS put four euro zone countries -Spain, Italy, Portugal and Ireland - on review for possible downgrade in case of Greece's non-compliance with bailout conditions.
At a summit later on Wednesday leaders from the European Union are expected to discuss the idea of regional bonds jointly underwritten by all euro zone member states.
Three-month copper on the London Metal Exchange slipped 0.9 percent to $7,670 a tonne by 0111 GMT, giving up some of the gains chalked up on Tuesday, which saw prices hit a one-week high of $7,816.
The most-active September copper contract on the Shanghai Futures Exchange fell 1.2 percent to 55,190 yuan ($8,700) a tonne, after touching a one-week high of 56,130 yuan on Monday.
Many traders closed their long positions ahead of an informal summit of EU leaders late on Wednesday, which is expected to discuss the idea of regional bonds jointly underwritten by all euro zone member states.
New French President Francois Hollande supports the proposal but Germany's long-standing opposition is unlikely to change, raising the risk of political deadlock in the euro zone.
Ratings agency Fitch cuts Japan's sovereign rating to A plus from AA, as a political stalemate dims the chance by the world's third largest economy to curb its debt.
Ratings agency DBRS put the sovereign credit ratings for Spain, Italy, Portugal and Ireland on review for possible downgrade on Tuesday, citing the risk that Greece may not comply with terms of its bailout program.
Lingering fears over a messy Greek exit from the euro zone overshadowed a spot of good news from the indebted nation. Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to rescue its four largest banks on Tuesday. An official said they would get the urgently needed funds as soon Wednesday.
In the U.S., there were hopeful signs for the country's economic recovery. The pace of sales for existing homes in April rose to its fastest in nearly two years and a falloff in foreclosures helped bring a surprise jump in prices.
In tin, consumers pounced on inventories of the metal in Malaysia as prices plunged this month, making it more attractive to Chinese importers, and as they sought to avert any developing bottlenecks at warehouse gates, trade and industry sources said.
Asian shares retreated on Wednesday as hopes for fresh measures to tackle euro zone debt faded and caution set in ahead of the EU summit, with renewed fears Greece would leave the euro bloc dampening appetite for riskier assets.
The euro and commodity currencies nursed heavy losses in Asia on Wednesday, while the safe-haven U.S. dollar held close to a four-month peak against a basket of major currencies on the heightened fears of a messy Greek exit from the euro zone.
0800 OECD latest economic outlook
1145 U.S. ICSC chain stores yy Weekly
1400 U.S. Existing home sales Apr
1400 EZ Euro zone consumer confidence May
1400 U.S. Richmond Fed manufacturing, services index May
Base metals prices at 0111 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7670.00 -69.00 -0.89 0.92
SHFE CU FUT SEP2 55190 -660 -1.18 -0.79
LME Alum 2029.75 0.75 +0.04 0.48
SHFE AL FUT SEP2 16005 -70 -0.44 1.04
HG COPPER JUL2 346.30 -2.40 -0.69 0.79
LME Zinc 1897.75 -13.25 -0.69 2.86
SHFE ZN FUT AUG2 14855 -90 -0.60 0.41
LME Nickel 16900.00 0.00 +0.00 -9.67
LME Lead 1945.00 -20.00 -1.02 -4.42
SHFE PB FUT 15130 -80 -0.53 -1.05
LME Tin 19550.00 -155.00 -0.79 1.82
LME/Shanghai arb 1279
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.3231 Chinese yuan)