Copper slips on firm dollar; technicals bearish

* London copper off 0.3 pct, ShFE slips 0.8 pct

* Dollar firms vs euro on Greek debt worries

* Technicals indicate further drop in copper prices

* Market volatility to persist near term -Morgan Stanley

* Coming Up: Euro zone finance ministers meeting

(Adds comment, updates prices)

By Manolo Serapio and Carrie Ho

SINGAPORE, May 16 (Reuters) - Copper ticked lower on Monday as the euro fell to a seven-week trough against the dollar on worries about the euro zone debt crisis, while investors were largely unsure where prices were headed following recent volatility.

The euro's drop comes ahead of a meeting by euro zone finance ministers who are likely to back a bailout package for Portugal and pressure Greece to announce more austerity steps to secure further emergency funding. [USD/] [ID:nLDE74F078]

The arrest of IMF chief Dominique Strauss-Kahn on charges of sexual assault could delay aid for Greece, which is struggling to meet the terms of a 110 billion euro European Union/IMF bailout last year. [ID:nN15215355]

"The main influence on the market today is the strengthening dollar which is responsible for the slide in copper," said a Singapore-based trader.

"But there is a lack of clear direction for copper prices due to uncertainties. All eyes are on the Greek debt crisis, but I doubt we will see any significant announcement out of the euro zone meeting."

Three-month copper on the London Metal Exchange CMCU3 eased 0.3 percent to $8,760 a tonne by 0703 GMT, following modest gains on Friday from Thursday's five-month low.

The most-active July copper contract on the Shanghai Futures Exchange SCFcv1 closed down 0.8 percent at 65,890 yuan per tonne.

"Prices have not moved a lot today and the market seems unsure of where they should end up," said Great Wall Futures analyst Li Rong.

"In the short term, we are in a period of uncertainty when the dollar seems to be on a long-term stabilisation trend, whereas there hasn't been any particularly negative macroeconomic data as yet," he said.

Technical charts suggest copper prices are expected to drop to $8,636 per tonne in London and to 64,110 yuan in Shanghai, said Reuters market analyst Wang Tao. [TECH/C] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a 24-hour Shanghai copper technical outlook: here For a 24-hr LME copper technical outlook: here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

"We believe volatility will persist in near term, although we are still constructive toward the long-term outlook for most metals as supply will remain constrained and demand steady," Morgan Stanley said in a research note.

Also hitting investor sentiment were comments from U.S. President Barack Obama that a failure to increase the U.S. debt limit could lead to a worse financial crisis and economic recession than 2008-09. [ID:nN14199711]

"Any bad news about U.S. debt pressures the base metals market. But the market is less worried about the U.S. than about euro zone debt," said China Futures analyst Yang Jun.

"There is widespread belief that the U.S. will not change its current course of a loose monetary policy and a weak dollar any time soon. And that's enough for the market for now."

In industry news, Sumitomo Metal Mining (5713.T: Quote), Japan's No. 2 copper producer, said it and trading house Sumitomo Corp (8053.T: Quote) will invest $724 million in a Chilean copper project and receive an annual supply of 110,000 tonnes of cathode copper, about 9 percent of Japan's total imports. [ID:nL4E7GG01K]

Base metals prices at 0703 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 8760.00 -30.00 -0.34 7375.00 18.78 SHFE Cu* 65890.00 -560.00 -0.84 59900.00

10.00 LME Alum 2568.50 3.50 +0.14 2230.00 15.18 SHFE Alum* 16645.00 -90.00 -0.54 17160.00 -3.00 COMEX Cu** 396.05 -1.45 -0.36 332.75 19.02 LME Zinc 2145.00 -10.00 -0.46 2560.00 -16.21 SHFE Zinc 16695.00 -165.00 -0.98 21195.00 -21.23 LME Nicke 24110.00 -290.00 -1.19 18525.00 30.15 LME Lead 2295.00 4.00 +0.17 2432.00 -5.63 LME Tin 28600.00 0.00 +0.00 16950.00

68.73 LME/Shanghai arb^ 815 Dollar/yuan 6.5083 \ 6.5089 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month .

(Source: http://af.reuters.com/article/metalsNews/idAFL4E7GG06H20110516)