SHANGHAI, July 23 (Reuters) - London copper prices firmed on Monday as investors looked for bargains after the metal fell its most in a month the session before on fears Spain would need a full sovereign bailout.
Riskier assets, including base metals and equities, tumbled on Friday on news Valencia needed financial aid, complicating Spain's efforts to stave off a full-blown sovereign bailout.
Three-month copper on the London Metal Exchange had edged up 0.1 percent to $7,548.75 per tonne by 0122 GMT, firming after falling 2.4 percent, the most since June 21.
"Sentiment is bearish for all base metals today, but copper prices firmed this morning on bargain hunting by Chinese investors who saw the London-versus-Shanghai spread narrowing and took the opportunity to buy in," said Orient Futures derivatives director Andy Du.
The most active November copper contract on the Shanghai Futures Exchange dropped 1.4 percent to 55,110 yuan ($8,600) per tonne, catching up with London's previous losses.
After Valencia's call for financial help from Madrid on Friday, the financial markets were further spooked by the central government cutting its economic forecast for 2013, indicating that Spain would stay mired in recession well into next year after a contraction expected at 1.5 percent in 2012.
The European Central Bank turned up the heat on Greece on Friday ahead of a review of its bailout programme, saying it would stop accepting Greek bonds and other collateral used by Greek banks to tap ECB funding, at least until after the review.
Italian Prime Minister Mario Monti says the country should try to get through the financial crisis, which has sent its borrowing costs spiralling, without the help of bailouts from its European partners. He added that Italy was on track to meet budget-cutting targets.
Forty percent of big Japanese manufacturers expect sales in China to fall short of initial estimates in the October-March second half of this business year, a Reuters poll showed, as a slowdown in China's economy bites.
Hedge funds and money managers sharply cut their net short position in U.S. copper futures and options in the week to July 17, as investors covered their short positions on uncertainty over additional monetary easing by the Federal Reserve.
Shares fell and the euro stayed vulnerable after hitting fresh lows early on Monday in Asia.
The euro fell to a near 12-year trough on the yen and plumbed record lows versus its Australian counterpart on Monday, starting the new week under pressure on persistent fears that Spain will eventually need a full sovereign bailout.
0130 - Australia producer price index for Q2
1400 - Euro zone consumer confidence for July
Base metals prices at 0122 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7548.75 3.75 +0.05 -0.67
SHFE CU FUT NOV2 55110 -800 -1.43 -0.93
LME Alum 1898.00 6.00 +0.32 -6.04
SHFE AL FUT OCT2 15475 -115 -0.74 -2.30
HG COPPER SEP2 343.00 -1.80 -0.52 -0.17
LME Zinc 1838.00 -1.50 -0.08 -0.38
SHFE ZN FUT NOV2 14585 -130 -0.88 -1.42
LME Nickel 15800.00 -150.00 -0.94 -15.55
LME Lead 1887.25 -13.75 -0.72 -7.26
SHFE PB FUT 14865 -130 -0.87 -2.78
LME Tin 18930.00 0.00 +0.00 -1.41
LME/Shanghai arb 1177
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.3735 Chinese yuan)