Reuters reported that copper fell on Monday as fears over possible credit rating downgrades in Europe stoked worries the region may take longer to pull out of its two year sovereign debt crisis, dragging down global economic growth.

Three month copper on the London Metal Exchange lost 0.95% to USD 7,275.25 a tonne by 0706 GMT, reversing gains from the previous session. Prices have tumbled 24% this year, snapping two annual gains.

The most-traded March copper contract on the Shanghai Futures Exchange declined by 1.3% to CNY 53,580 (USD 8,400) a tonne. Prices tumbled almost 5% last week, the biggest weekly drop since the end of September. Futures have lost 25% of their value this year.

Mr Henry Liu the Hong Kong-based head of commodity research at Mirae Asset Securities said that "People don't believe in any bright spots in demand.”

"The European market is cutting back on consumption and that's seen in iron ore demand. It shows that the financial side of things has definitely affected commodity consumption."

Europe's debt crisis had also taken its toll on banks and brokerages. Two months after brokerage MF Global collapsed, Credit Agricole said last week it was withdrawing from commodities trading and slashing its financing of the market.

Fitch Ratings also warned on Friday it may downgrade France and six other euro zone countries, saying a comprehensive solution to the region's debt crisis was technically and politically beyond reach.

(Sourced from Reuters)