Copper prices surged in early London trade on Friday after mining group BHP Billiton said it was temporarily closing operations at its strike-hit Escondida mine in Chile.

BHP called off wage talks with a labour union and shut down production at the world's biggest copper mine by output, saying that because of picketing employees blockading roads, it could not guarantee the safety of those still working at the mine.

Before Friday's closure, Escondida was still producing at 40 per cent of capacity despite the wage strike. At full capacity, the mine provides 8.5 per cent of the world's copper.

With inventories of the metal at little more than a day's worth of global demand, speculators have kept a keen eye on developments in Chile. Traders however, said that a rebound was always likely after Thursday's 5 per cent fall in copper prices as technical selling drove the base metals complex lower.

Three month copper on the London Metal Exchange was trading 2.1 per cent higher at $7,440 a tonne.

"The copper market will be watching developments at Escondida very closely," said Robin Bahr, base metals strategist at UBS. He added: "This mine alone accounts for some 8 per cent of global copper supply in a market characterised by tight supply, strong demand and very low stocks."