Copper rose on Thursday as investors and consumers saw value in a metal that hit three-week lows the previous session, but weak trade data from China and worries about Greece defaulting on its debts and possibly leaving the euro kept gains firmly in check.
Also helping the red metal, weekly U.S. data on jobless claims and imports beat market forecasts, while there was some relief that Greece had secured fresh rescue funds.
Overall though, investors remained worried, especially with data from top consumer China showing copper imports fell 18.8 percent to an eight-month low in April. In addition, China import and export data missed forecasts, raising some doubts about the country's growth prospects.
"Short term the balance of risk is on the downside. Everyone is thinking Greece will be out of the euro in a month or two (and) trade data out from China today was poor," said Citi analyst David Wilson.
But he added: "It's difficult to be massively bearish because each time copper dips you see good consumer buying."
Benchmark copper on the London Metal Exchange closed up 0.65 percent at $8,105 a metric ton (1.1023 tons), versus a last bid of $8,053 on Wednesday, when the metal hit a three week low of $7,949.75 a metric ton.
Greek Socialist leader Evangelos Venizelos will make a last-ditch attempt to form a government on Thursday and avoid a new election after voters rejected a bailout deal and pushed Greece into a political crisis.
In addition, Spain on Wednesday took over Bankia, one of the country's biggest banks, aiming to dispel concerns over the government's ability to clean up the financial sector.
"Copper is taking a breather after the heavy shake-up across markets we have seen in the past few days, but there is still a lot of uncertainty out there. There are concerns about China, about the outlook for Spain, Greece and the euro zone," said Credit Suisse analyst Stefan Graber.
Unlike the economic outlook, however, copper's fundamentals pointed to a slightly stronger picture.
"The physical market doesn't look as bad as the price would suggest. We hear of some buying activity here and there, and this is in line with the latest manufacturing data from China, which points to a pick-up in manufacturing activity," Graber said.
BUY BELOW 8,000
Copper inventories in LME-monitored warehouses fell to 219,850 metric tons, hitting a fresh 3 1/2 year low.
Stocks of copper in warehouses monitored by the Shanghai Futures Exchange (SHFE) have also declined in the past few weeks after a very steep rise in the first quarter this year.
"An inventory reduction has been observed for the past four weeks on the SHFE. In the short term, the copper price could remain under pressure, given that China's import demand has had a major bearing on the price for long periods in the past," Commerzbank said in a research note.
"Copper briefly dipped below the $8,000 a tonne mark yesterday to hit its lowest price for three weeks, though it recovered again overnight. It would appear that there is increased buying interest among market players at prices below $8,000 a tonne."
In other metals tin ended at $20,425 a metric ton from $20,605 at the close on Wednesday while zinc, used to galvanize steel, closed at $1,969 from $1,943. Battery material lead, ended at $2,100 from $2,075 while aluminum closed at $2,045.50 from $2,049.
Stainless steel ingredient nickel closed at $17,165 from $17,195.
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