SHANGHAI, May 29 (Reuters) - Copper slipped on Wednesday after news that Spain needed to issue new debt to recapitalise a troubled lender and the country suffered another rating downgrade, stoking worries about the euro zone's debt crisis.
Germany's 10-year bond yield hit a fresh record low on the news, indicating a flight to safety by investors. This was despite a recent spate of announcements by Beijing on spending programmes to stimulate the economy and signs of improvement in the U.S. property market.
Three-month copper on the London Metal Exchange edged down 0.4 percent to $7,639 a tonne by 0120 GMT, after falling 0.2 percent on Tuesday.
The most-active September copper contract on the Shanghai Futures Exchange fell 1.1 percent to 55,480 yuan ($8,700) a tonne, after losing 0.2 percent in the prior session.
Germany's 10-year bond yield hit a fresh record low while the euro edged towards its weakest in two years on Tuesday as doubts grew over Spain's plan to recapitalise its banks and obtain finance for its struggling regional governments.
In a bid to contain its debt crisis, Spain will recapitalise nationalised lender Bankia by issuing new debt, not by injecting bonds into the lender, a government source told Reuters on Tuesday. The source added that Spain will likely adopt on Friday a new mechanism to back its regions' debt.
Egan-Jones Ratings cut Spain's credit level yet again on Tuesday, the third downgrade from the agency in less than a month as the country's weak banks continue to worry investors.
As the euro zone ponders a possible Greek exit, policymakers have not yet built a shield robust enough to prevent a bank run in one country sending others in the bloc deeper into crisis.
China plans to allocate an annual fund of up to 2 billion yuan ($315 million) from this year to help develop and mass produce energy-saving vehicles to cut carbon emissions, the government said.
U.S. home prices edged higher for the second month in a row in March as the housing recovery picked up traction, while gains in some of the hardest hit areas suggested the improvement was becoming more broad-based.
Asian shares slipped on Wednesday, hurt by fears that Spain's banking woes will push up the country's borrowing costs to unsustainable levels, although falls were limited on hopes that Greece would stay in the euro zone and for China stimulus steps.
Worries over Spain's finances also pushed the euro lower on Tuesday to its weakest level versus the U.S. dollar since July 2010.
0800 EZ Money-M3 3m moving av Apr
0900 EZ Business climate May
0900 EZ Economic sentiment May
1145 U.S. ICSC chain stores yy Weekly
1255 U.S. Redbook U.S. retail sales Weekly
1400 U.S. Pending home sales April
Base metals prices at 0120 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7639.00 -31.00 -0.40 0.51
SHFE CU FUT SEP2 55480 -600 -1.07 -0.27
LME Alum 2020.25 4.25 +0.21 0.01
SHFE AL FUT SEP2 16000 -30 -0.19 1.01
HG COPPER JUL2 345.30 -0.90 -0.26 0.49
LME Zinc 1908.25 -5.75 -0.30 3.43
SHFE ZN FUT SEP2 14950 -70 -0.47 1.05
LME Nickel 16686.00 36.00 +0.22 -10.82
LME Lead 1948.00 0.00 +0.00 -4.28
SHFE PB FUT 15200 -50 -0.33 -0.59
LME Tin 20190.00 -10.00 -0.05 5.16
LME/Shanghai arb 1044
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.3480 Chinese yuan)