London Metal Exchange three-month copper slumped Thursday as liquidation by commodity-trade advisory funds pressured prices back 6% below previous kerb levels, traders said.

Copper prices fell in $100 "gaps" in the run-up to late kerb in London on very little volume, ending the afternoon session down $430, or 5.5%, on previous kerb levels at $7,350 a metric ton.

"A late spell of liquidation by the speculative community knocked prices down but it's left people scratching their heads," said a broker.

Despite losses, market participants agree copper prices remain firmly underpinned by potential supply-side concerns including contract negotiations at major copper producers such as Codelco and Teck Cominco.

The union at Codelco's Escondida operations is to meet with management later Thursday to start negotiations ahead of their workers' Aug. 2 contract expiry.

"They've agreed to meet which is a good sign but, that alone, is not going to make investors sell," said a trader.

The possibility of a workers' strike at Teck Cominco Ltd.'s Highland Valley copper mine in Canada is also being closely watched by the market. Unionized workers have said they might decide to strike if they can't agree to a new wage deal by Oct. 1.

"As long as there are these (strike issues) in the background it's not likely anyone's going to short the market," said another trader. "I wouldn't want to pick the next $1,000 from here."

LME nickel was relatively resilient, falling just 1.7%, or $405, to $23,595/ton at late kerb, compared to comparatively large intraday falls in the remainder of the complex.

Bullish comments from Canadian miner Inco Ltd. about record levels of supply tightness in the nickel market also underpinned positive sentiment for the metal, according to UBS.

Aluminium and zinc followed copper's move lower, falling $59, or 2.3%, and $165, or 4.9%, respectively. Zinc prices recorded the largest gains of the complex Wednesday, rising 3.1% to $3,340/ton, so prices had further to fall when liquidation set in, a trader said.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Wednesday PM kerb

Copper 7350.00-7370.00, Dn 430.00
Lead 1040.00-1042.00, Dn 11.00
Zinc 3170.00-3180.00, Dn 165.00
Aluminium 2500.00-2505.00, Dn 59.00
Nickel 23595.00-23600.00, Dn 405.00
Tin 8100.00-8150.00, Dn 150.00