* Worries about financing spur traders to offload copper
* Shanghai copper premiums plunge 50 pct this week -traders
* COMING UP: U.S. nonfarm payroll at 1230 GMT
(Updates with official prices)
LONDON, June 6 (Reuters) - Copper dropped to a one-month low on Friday and was on track for its biggest weekly fall in nearly three months as an investigation into metal financing in China prompted speculation that a crackdown could hit trade in the metal.
Benchmark copper on the London Metal Exchange (LME) hit a session low of $6,640 - a level last reached on May 8 - before paring losses to trade 1.8 percent down at $6,656 a tonne in official rings.
It was on track to post a 3 percent drop for the week, the biggest weekly fall since mid-March.
Some copper cargoes held at China's Qingdao Port were being shipped to more regulated LME warehouses, industry sources said, as banks and trading houses took precautions over an investigation into metal financing at the world's seventh-busiest port.
Using collateral such as copper is a popular way to raise finance in credit-strapped China, the world's biggest buyer of the metal, and a probe into metals stocks in Qingdao port has evoked memories of a huge March sell-off on worries about contagion in the country's credit markets.
"The ongoing investigation about the China Qingdao port is still impacting the metal. Once the Chinese situation is clear, we expect the rally to continue for the metal, unless there are some big discrepancies," said Naeem Aslam, chief market analyst at Ava Trade.
The investigation appears to be confined to one company and linked companies, rather than being indicative of a broader issue, some trade and warehousing sources said.
In the wider market, traders were awaiting U.S. labour data on Friday to gauge the health of the world's largest economy and the outlook for demand for industrial metals.
U.S. job growth is expected to have slowed in May, with the unemployment rate probably ticking up, but not by enough to upset the view that the economy is bouncing back strongly after a winter slump.
"Positive data could certainly push the dollar higher, which could keep the pressure on the metal. But the ECB's new measures have certainly ignited new hopes of growth in Europe, which may bring more demand for the metal in the future," Aslam said.
The European Central Bank (ECB) cut interest rates to record lows on Thursday, launched measures to pump money into the sluggish euro zone economy and pledged to do more, if needed, to fight off the risk of Japan-like deflation.
China will cut the reserve requirement ratio (RRR) further for some banks when appropriate, the bank regulator said, only a week after the government lowered the RRR for the second time in two months to bolster economic growth.
Still, firms holding copper stocks in bonded warehouses in China sold more metal on fears that they would not be able to obtain inventory financing from banks, pushing down premiums near 50 percent this week, traders in Shanghai said.
The stocks traded at premiums of $70-$80 a tonne over the cash LME price this week, versus about $120-$130 last week, they said.
"You're seeing material being sold for two reasons - because those financing deals are being unwound and people who picked up material purely on a speculative basis will take profit now," one Singapore trader said.
Traders in Shanghai said offers to sell bonded copper had been rising since Wednesday as developments at Qingdao stoked fears among some owners of the stocks that it would be hard to obtain financing from banks in the near term.
In other metals, aluminium traded down 0.6 percent at $1,838 in official rings, while nickel fell 2.7 percent to $18,520.
Zinc, lead and tin were untraded. Zinc was last bid down 1 percent at $2,068, lead was last bid at $2,083.50, down 1 percent, and tin was last bid at $22,950, down 1.3 percent.
Refined tin shipments from top exporter Indonesia jumped to 12,778.81 tonnes in May, a trade ministry official said, implying an increase of 145 percent from the previous month and the highest level since December.
Chilean state-run copper miner Codelco said on Friday that it was replacing Chief Executive Officer Thomas Keller, who has had an uneasy relationship with the new board.
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
Three month LME tin
(Additional reporting by Melanie Burton in Sydney and Polly Yam in Hong Kong; Editing by William Hardy and David Goodman)