LONDON- Copper dipped on Monday on worries that spreading COVID-19 infections in top metals consumer China would hit demand while nickel slumped in thin trading amid uncertainty about short positions in the market.

Three-month copper on the London Metal Exchange shed 0.4% to $10,222 a tonne by 1100 GMT, the third session of losses.

"The market is nervous because COVID continues to spread in such a major city Shanghai," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

China's financial hub of Shanghai launched a planned two-stage lockdown to contain a coronavirus surge, adding to worries about growth prospects for the world's second-biggest economy.

Hansen said investors were also wary after a key measure of the U.S. bond yield curve inverted for the first time since 2006 in a sign that recession risks are increasingly being priced in.

"The yield curves in the U.S. are screaming that we are heading towards an economic slowdown, which could lead to lower demand on a global perspective," he said.

Benchmark LME nickel slid 8% shortly after the open, but avoided its 15% daily price limit after volatile recent trading. It pared losses to $33,300 a tonne, down 6.2%.

Traders were unsure about the current status of major short position by one of the world's top producers, China's Tsingshan Holding Group. Short-covering by the firm was blamed for market chaos and a shutdown in trading on March 8.

Nickel on the Shanghai Futures Exchange tumbled by as much as the 17% limit to 208,110 yuan a tonne, after it posted a record weekly gain on Friday.

* Profit growth at China's industrial firms accelerated in January-February in line with other signs of momentum in the economy.

* Also weighing on the metals market was a firmer dollar amid U.S. Fed interest rate hike expectations, making greenback-priced metals more expensive to holders of other currencies.

* In other metals, LME aluminium fell 0.2% to $3,598, zinc slipped 0.2 % to $4,059, but lead gained 0.2% to $2,354 and tin rose 0.2% to $42,375.

* For the top stories in metals and other news, click or

($1 = 6.3711 Chinese yuan)

(Reporting by Eric Onstad, Editing by Louise Heavens)