UPDATE 7-Collahuasi, Workers Near Deal to End Prolonged Strike

IQUIQUE/SANTIAGO, Dec 1 (Reuters) - Union leaders and management at Chile's Collahuasi copper mine moved toward an
agreement on Wednesdayto end the 27-day strike at the world's No. 3 copper deposit.

Two sources familiar with the negotiations said the sides were close to a wage agreement despite tensions earlier in the day sparked by a worker protest.

"There's light at the end of the tunnel," said one of the sources, adding that a deal could be reached tomorrow. The sources asked not to be identified because they are not allowed to speak publicly about the issue.

Negotiations were put on hold until early on Thursday to give union leaders a chance to provide an update on the status to talks to mine workers who are camped out at an abandoned school in the northern city of Iquique.

Both labor and management have appeared keen on a deal to end the strike, which is now longer than a nearly four-week 2006 stoppage at Escondida, the world's top copper mine.

The advances came after tensions flared at the negotiating table following a brief clash between police and workers demanding local authorities force strike defectors back onto the picket line.

Collahuasi has operated with limited production losses thanks to a contingency plan. The operator said its output was at normal levels, a day after saying operations were normalizing satisfactorily. It did not quantify what "normal" meant.

At least 220 full-time workers broke from the strike at Collahuasi, which extracts 3.3 percent of global mined copper, or 535,000 tonnes a year. It has hired hundreds of temporary workers and around 100 new, permanent employees.

The mine, owned by Xstrata (XTA.L) and Anglo American (AAL.L), had by last week probably suffered minimal losses of about 6,000 tonnes, or about 1 percent of annual output, traders say.

Union leaders have shown signs of fatigue as restless workers who are going unpaid press for resolution.

Copper prices CMCU3 have shown little sensitivity to the strike or resumed talks, partly because the operator has kept supplies flowing and other factors such as the euro zone debt crisis have taken precedence.