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LONDON, Aug 7 (Reuters) Copper futures backed off highs above $8,000 a tonne on Monday as early buying faded but got strong support from a strike at the world's biggest source of the metal.

More than 2,000 union workers began a strike at BHP Billiton's Escondida mine in Chile after talks on a new wage contract failed despite 11th-hour government mediation, the union said.

Copper for delivery in three months on the London Metal Exchange touched $8,030 in early trade, up $170 from Friday's closing price, but by 1409 GMT -- after the strike began -- had slipped to $7,800/7,815.

The market had already priced in the strike, a trader said, and some investors banked profits after the LME contract hit $8,030.

Fund managers drawn to copper futures said tight supply and strong demand were the long-term driving factors.

''We will be buying it no matter what,'' a European fund manager with over $100 million in assets said.

''The performance of base metals has been huge, and we'll be increasing our base metals exposure again today.'' At $8,000, copper is almost $1,000 below the record high it hit in May but more than four times more expensive than it was three years ago.

Lack of new supply and dwindling stocks meant little surplus metal was in the system, which would support prices, investment bank UBS said.

''We still see industrial metal prices peaking next year and favour copper, platinum and zinc,'' strategist John Reade said in a note.

Dollar-denominated copper, other base metals and gold were supported by a fall in the U.S. currency on growing expectations that the U.S. Federal Reserve would hold benchmark interest rates steady at 5.25 percent this week after a weak U.S. jobs report.

Aluminium traded up to $2,557 per tonne, $18 above Friday's close, and gold reached $651 per ounce, up $7 from Friday's late quote in New York.

Mining stocks fell in London as equity markets were dragged down by high oil prices. London Brent crude jumped 2 percent to more than $77 per barrel as producer BP began shutting an oil field in Alaska.

REUTERS SBA RN2118

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