London: Metals dipped in Europe yesterday, holding near historic highs, but with increasingly vicious daily moves dealers warned a dip in sentiment could mean a rapid sell-off.

"People are expecting a severe correction. The price is down today, but the question is whether this is the big move. The market is very nervous, waiting for something to happen," a trader said.

Analysts said investors were reluctant to bet that prices would fall, known as 'going short', after losing money. "Clearly we are in bandit country and we must be prepared to be ambushed as anyone who has tried to go short has discovered to their cost," ABN Amro analyst Nick Moore said.

Copper, aluminium, zinc and nickel futures reached record highs on the London Metal Exchange on Thursday, due to falling global warehouse inventories, mine closures in Mexico and a weak dollar.

"The bull trend in the metals markets remains intact. Copper has been the overall leader, but aluminium is trying to play some catch-up on the break through channel resistance," JP Morgan technical strategist Robin Wilkins said in a report.

"Both are due near-term pullbacks which offer buying opportunities," he said.

But dealers were concerned that the move in copper prices, which have almost doubled since the start of the year, could not be fully justified by supply and demand.

"We know the fundamentals are tight, but this is silly. We suspect someone is scrambling to cover a big short in a very thin copper market," analyst David Thurtell of the Commonwealth Bank of Australia said in a research note yesterday. Moore said, "The integrity of the London Metal Exchange is being called openly into question."

Some dealers have started to describe the roller coaster market, which gained as much as 9 percent on Thursday as untradable. A spokesman at UK financial watchdog, the Financial Services Authority, declined to comment on the LME specifically.

"One of the FSA's objectives is to maintain market confidence...in support of that, the FSA regulates and monitors exchanges on an ongoing basis," he said.

Record high: Platinum touches $1,333 per ounce

Platinum extended sharp gains to set a new all-time peak on positive supply-demand outlook and dollar weakness yesterday, while gold matched a 26-year peak on strong investor interest.

Platinum reached a record high of $1,333 an ounce before easing to $1,330/$1,3402 by 0947 GMT, against $1,291/$1,298 in New York late on Thursday.

Prices of platinum, mainly used in jewellery and in car exhaust systems, were seen volatile ahead of the Platinum Week in London starting on Monday and release of an industry report by Johnson Matthey, the world's top platinum distributor. "There is more fundamental justification for platinum. We believe that even at these high prices, the platinum market is in deficit at the moment," said John Reade, analyst at UBS Investment Bank. China witnessed good consumer demand in the last few months and generally users, rather than speculators and investors, had been buying the metal, he said.