SHANGHAI, June 27 (Reuters) - London copper dropped on Wednesday, snapping two straight days of gains, as investors shied away from riskier assets on growing conviction a European summit this week will fail to resolve the region's intractable debt crisis.
But signs top copper buyer China may be slowly restocking with prices near 2012 lows are likely to check losses.
Three-month copper on the London Metal Exchange fell 0.3 percent to $7,335.50 a tonne by 0126 GMT.
The most-active October copper contract on the Shanghai Futures Exchange fell 0.1 percent to 53,580 yuan ($8,400) a tonne, stretching losses to a fourth session.
European Council President Herman Van Rompuy on Tuesday released a report on closer fiscal and banking union, envisaging a euro zone treasury that would issue common debt in the medium term. But Germany, two days before the June 28-29 summit, flatly rejected the idea of common euro zone bonds.
German Chancellor Angela Merkel said Europe would not share total debt liability "as long as I live".
Spain's short-term borrowing costs nearly tripled at auction on Tuesday, underlining the country's precarious finances as it struggles against recession and juggles with a debt crisis among its newly downgraded banks.
U.S. home prices picked up in April for the third month in a row, the latest indication that a recovery in the housing market is gaining traction. But in a sign of the struggles still facing the broader economy, separate data on Tuesday showed consumer confidence fell to its lowest level in five months in June.
Copper prices are expected to be supported on indications of restocking by China due to a favorable price arbitrage.
Asian shares were flat and the euro pressured on Wednesday ahead of the EU summit this week, with Germany staunchly opposed to sharing the region's debt burden.
0600 Germany Import prices
1230 U.S. Durable goods orders
1230 U.S. Chicago Fed Midwest Manufacturing Index
1400 U.S. Pending home sales
Base metals prices at 0126 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7335.50 -23.50 -0.32 -3.48
SHFE CU FUT OCT2 53580 -40 -0.07 -3.69
LME Alum 1847.25 2.25 +0.12 -8.55
SHFE AL FUT OCT2 15040 -25 -0.17 -5.05
HG COPPER JUL2 330.80 -0.50 -0.15 -3.73
LME Zinc 1778.00 2.00 +0.11 -3.63
SHFE ZN FUT OCT2 14230 -85 -0.59 -3.82
LME Nickel 16300.00 25.00 +0.15 -12.88
LME Lead 1769.00 1.00 +0.06 -13.07
SHFE PB FUT 14400 -80 -0.55 -5.82
LME Tin 18560.00 0.00 +0.00 -3.33
LME/Shanghai arb 726
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.3629 Chinese yuan)