* S.Korean copper plant seen closed for at least 2 wks * Coming up: euro zone preliminary Q1 GDP at 0900 GMT (Adds comment, detail; updates prices) By Melanie Burton SYDNEY, May 15 (Reuters) - London nickel pared losses on Thursday after plunging nearly 10 percent on a blast of momentum-based sales that gouged into a spectacular rally driven by supply concerns. Nickel prices had surged more than 50 percent this year to reach the highest in two years on Tuesday, after top ore supplier Indonesia banned exports in January. But early profit-taking on Thursday after a 5-percent fall the day before triggered a flurry of chart-based sales, before nickel steadied with traders attracted by the lower prices. "The only fundamental argument that prices are overdone and why they would move lower would be that the Indonesian government is going to relax the ban on exports," said analyst Mark Keenan at Societe Generale in Singapore. "(But) when the new government comes in October, it's very unlikely that this is going to be top of their agenda. They have the full support of the trading community and the entire mining community is just thrilled." Nickel is expected to bounce back as long as top exporter Indonesia keeps squeezing supply and stainless steel producers can absorb higher prices. News that China is increasing its support for its wobbly trade sector with a raft of new measures that include giving more tax breaks, credit insurance and currency hedging options to its exporters also helped neutralise metals selling. Three month nickel on the London Metal Exchange slumped to $18,090 a tonne at one point, a drop of 9.8 percent from Wednesday. Prices were trading down 4.9 percent at $19055 by 0740 GMT, in whipsaw trade, trimming the year's gains to 37 percent. "Prices are doing some classic correction," said one Singapore based trader. Stop-loss sales were triggered around $19,000 and around$18,500-19,000, traders said. LME copper pared loses to trade little changed at $6,915.50 a tonne after a 1.1 percent advance from the previous session, although zinc and aluminium shed around 1 percent. Adding support to copper prices, the LS-Nikko copper plant in South Korea is expected to halt production for at least two weeks after an explosion caused injuries, sources with knowledge of the matter said on Wednesday. LME copper hit its highest in more than two months at $6,940 a tonne on Wednesday, before closing up 1.1 percent. The most-traded August copper contract on the Shanghai Futures Exchange, which scaled a two-month top overnight, pared gains to trade at 48,310 yuan ($7,800) ($7,800), still up 0.3 percent. Worries about bad debt continue to cast a shadow over China's economic health and the outlook for metals demand. As China's economy continues to cool, companies are waiting longer and finding it harder to get paid for goods and services they've already sold, leading to record amounts of receivables - and potential write-offs - on corporate balance sheets. Euro zone industrial output fell as expected on the month in March and dropped unexpectedly year-on-year because of a steep drop in energy production, data from the European Union's Statistics Office showed on Wednesday.

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