* Korean tension, debt fears in Europe limit risk exposure
* Strike at No. 3 copper mine Collahuasi continues
* Coming up: U.S. durable goods data on Wednesday (Updates with New York closing copper price, adds New York dateline/byline and analyst comments)
By Chris Kelly and Melanie Burton
NEW YORK/LONDON, Nov 23 (Reuters) - Copper ended down after hitting its lowest in a week on Tuesday as geopolitical tension added to concerns over Europe's debt crisis, driving investment money into safer-havens such as gold and the dollar.
An artillery exchange in the Korean peninsula exacerbated the risk-aversion ruling financial markets in recent weeks.
"I think the big question on the markets' mind, and why you're seeing such volatility across the board, is people wondering if this is a one-time incident or an opening salvo of more to come," Zachary Oxman, managing director with TrendMax Futures in Encinitas, California, said of the Korean incident.
"That's why you're seeing gold up a percent and why you're seeing the dollar spike ... all in addition to the European debt worries already out there."
On the London Metal Exchange (LME), benchmark copper was last bid at $8,140/$8,145 a tonne against Monday's $8,290.
Earlier, it fell to $8,050 a tonne, its lowest since Nov. 17, and 10 percent below its record high of $8,966 a tonne hit on Nov. 11.
COMEX copper for December delivery shed 4.90 cents, or 1.3 percent, to settle at $3.7025, down over 9 percent from a more than two-year peak at $4.0835 on Nov. 11.
"We could see this short dollar, long commodity trade rotate and start to see strong dollar, weak commodities, short euro trade starting all over again," Oxman said.
A second straight day of gains in the U.S. dollar continued to knock the wind out of industrial metals.
The currency received an extra boost against the euro after German Chancellor Angela Merkel said Ireland's crisis was different to Greece's, but just as worrying and the euro was in an "exceptionally serious" situation.
"It's just a big, cyclical rotation. It's like we have this gigantic set of dominoes set up, and we're just waiting for one country to push that first domino over ... it's sitting at a 45 degree angle right now," Oxman said.
Even upbeat growth data in the United States and the 16-country euro zone failed to shield against the bearish brunt of seller momentum.
Investors also fretted about the demand outlook in China. The market expects the world's top consumer of base metals to tighten monetary policy further, locking up cash.
Data this week showed copper imports in China fell almost a third in October, but analysts said the monthly decline was driven by supply rather than demand.
Analysts, however, maintained confidence in Chinese demand.
"No one in China is worried about rate hikes slowing down demand for metal," Societe Generale analyst David Wilson said.
"Speaking to copper producers, they all have full order books. Even the tier-four cities are on a huge building spree and it's not slowing down."
TIGHTENING MARKET
Signs have emerged of a tightening copper market next month as LME inventories have dropped steadily since the start of the year, with metal for delivery on Dec. 15 trading at "pretty brutal" premiums over those for one week later, a trader said.
Supply has been tightening noticeably with cash copper flipping into a premium against the benchmark three-month contract some two weeks ago. The premium has risen above $30.5 a tonne from a $2.5 discount in early November.
On the supply side, a vast majority of workers at the world's No. 3 copper mine, Collahuasi, vowed to ignore management's latest wage offer that expires on Tuesday, and push for the mine to reopen contract talks to end a 19-day-old strike.
Across other metals, aluminum closed down $33 at $2,255 a tonne, while nickel ended unchanged at $21,600 a tonne.
Zinc shed $53 to close at $2,085 a tonne, and lead fell as low as $2,164, its lowest in about a week, as funds responded to a worsening chart picture. It closed down $63.50 at $2,186.50 a tonne.
Tin approached a two-month low at $23,815 a tonne, before ending down $400 at $23,900. (Additional reporting by Alison Birrane and Rebekah Curtis in London; editing by Dale Hudson)