SYDNEY: London nickel plunged nearly 10 percent on Thursday as light profit-taking triggered a blast of momentum-based sales after supply concerns fuelled a rally of more than 15 percent in the past week. 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 as some investors took profits, traders said chart-based sales were triggered pushing prices down. "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 likely to see a deeper retreat than Wednesday's 5-percent fall, but it is also due to bounce back as long as top exporter Indonesia keeps squeezing supply and stainless steel producers can absorb higher prices. 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 had steadied at $18,350 by 0205 GMT, still down by 8.4 percent and trimming the year's gains to 32 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. The selling spilled into other metals, with LME copper down 0.7 percent at $6,875, paring a 1.1 percent advance from the previous session, while zinc and led 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 caled 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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