London copper slipped from a near 2 week high in the previous session as a stronger dollar weighed and investors remained concerned about economic prospects in top metals consumer China.

The dollar held firm near 4 week highs against a basket of currencies, supported by expectations of an end in US monetary stimulus. A stronger dollar makes dollar priced metals costlier for non US investors.

Three month copper on the London Metal Exchange CMCU3 was down 0.3% to USD 6,957 per tonne by 0936 GMT bringing losses for the year so far to around 12%.

Copper on Monday climbed 3.4% spurred by bargain hunting and by data showing upbeat US, British and Japanese manufacturing activity while European activity appeared to stabilize.

Investors quickly turned their focus to Chinese data also released Monday, which showed that activity among large goods producers had slowed to multi-month lows as demand dried up from customers at home and abroad.

Mr Karim Cherif analyst of Credit Suisse said that "Concerns about China are worrying especially as regards liquidity and on the supply side things are improving. That said, metals have really priced in most of the negative news, so nearer term, we could see a bit of a short-covering bounce."

Markets awaited US non farm payrolls data for June which is due on Friday, for signals about the health of the world's largest economy and hints on when the Federal Reserve may begin to taper off its supportive bond buying program.

On the plus side for copper, the premium for cash copper versus the three month price rose to USD 8.50, its highest point since mid July which indicated a squeeze on near term supplies.

In Shanghai, meanwhile copper drew some support from a flurry of demand for financing purposes in China. Some trading companies have been importing metal before selling it onto the domestic market in return for cash, pushing up premiums for copper in bonded zone stores and underpinning prices.