* Rising LME copper inventories also weigh
* Nickel gains, but below 8-month peak, on supply fears
* Coming Up: Federal Reserve June meeting minutes; 1800 GMT (Adds details, updates prices)
By Manolo Serapio Jr
MANILA, July 6 (Reuters) - London copper futures dropped for a third straight session on Wednesday, pulling further away from a two-month high, as investors unloaded risky assets amid renewed worries over the global impact of Britain’s exit from the European Union.
Nickel, however, managed to eke out gains on worries over potential mine closures in the Philippines, the top nickel ore shipper to China.
But risk aversion remained the theme elsewhere in Asia as sterling hit a 31-year trough and stocks skidded, with concerns that financial and political instability in Italy could lead to even more chaos in Europe spooking investors further.
“The market is beginning to focus on the wider euro zone risk as well,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Three-month copper on the London Metal Exchange was down 0.3 percent at $4,803 a tonne by 0705 GMT. The metal touched a two-month high of $4,960 on Monday.
Rising copper inventories, which suggest slow demand, are keeping a lid on prices. As of July 4, stocks of copper in LME-approved warehouses were at 198,925 tonnes MCU-STOCKS, the most since June 15.
But copper, along with other industrial commodities, are likely to be swayed more by unfolding events in Britain and the rest of Europe. Three funds investing in British property said they were suspending trading because too many people were rushing to withdraw their money at once.
Adding to the gloom is the crisis in Italy ahead of a referendum in October on constitutional reform, which could push back euro zone’s third-largest economy into recession and potentially generate a Greek-type meltdown.
“The worst case scenario for markets would be the forcing of another euro zone emergency where the referendum is lost leaving Italy without effective government and a looming banking crisis that can’t be solved without compromise between the different national interest groups within Europe,” said Spooner.
LME nickel gained 0.6 percent to $9,765 a tonne. Nickel touched an eight-month peak of $10,410 on Monday on worries about potential disruptions over Philippine ore supply to China.
The Philippines’ nickel ore shipments to China dropped 28 percent to 7.2 million tonnes over January-May, Chinese customs data showed.
While nickel bulls have been invigorated by the prospect of demand exceeding supply for the first time in years, analysts say large stockpiles mean the recent price rally could soon fizzle out.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar