Dec. 31 (Bloomberg) -- Copper fell for a second consecutive session in London on speculation that a slump in the U.S. housing market will extend into next year and further damp demand for industrial metals. Nickel and aluminum also dropped.

Investors still are assessing how much subprime-mortgage defaults will affect demand for metals such as copper, said Kevin Tuohy, a trader at MF Global U.K. Ltd. in London. The U.S. is the second-biggest copper consumer after China.

``A slowdown in North America and the trouble in the broader financial markets have really hung over metals in the last few months and had a big impact,'' Tuohy said. ``We expect more fallout in the first quarter before things start to improve.''

Copper for delivery in three months on the London Metal Exchange dropped $155, or 2.3 percent, to $6,675 a metric ton. The metal, used in pipes and wires, climbed 5.5 percent this year, the smallest annual gain since 2002. It rose 44 percent in 2006.

Sales of new homes in the U.S. fell to a 12-year low in November, dropping 9 percent to an annual pace of 647,000, the Commerce Department said Dec. 28. That was less than the weakest forecast of 68 economists surveyed by Bloomberg News.

Copper stockpiles monitored by the LME declined 900 tons, or 0.5 percent, to 197,450 tons, according to LME daily data. Inventories increased 8 percent this year and are four times higher than at the end of 2004.

Chilean Strike

Codelco, the world's largest copper producer, said today that talks continued between Chilean workers and a port operator to resolve a strike that has hampered its shipments. Contract workers have been on strike since Dec. 26 in a dispute over bonuses. Codelco is stockpiling copper from its largest division until the dispute is resolved, its press office said.

Nickel fell $100, or 0.4 percent, to $26,300 a ton. Nickel for immediate delivery will average $29,500 next year, according to the median of 19 analysts surveyed by Bloomberg News this month. The median forecast is 21 percent below this year's average and 46 percent less than the record set in May.

Lead dropped $20 to $2,550 a ton. The metal, used mostly in batteries, jumped 53 percent this year.

Rising demand in China, the world's largest user, and disruptions to mines including Ivernia Inc.'s Magellan project in Australia, which produces 3 percent of the world's lead, contributed to the price increase.

Zinc slid $55, or 2.3 percent, to $2,370 a ton, taking this year's decline to 44 percent. It was the worst-performing metal on the LME in 2007. Aluminum declined $9 to $2,409 a ton, and tin dropped $45 to $16,425 a ton.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

Last Updated: December 31, 2007 14:43 EST