Copper Drops to 2 1/2 Year Low as Metals Slump on Credit Crunch

Copper tumbled in London, heading for the biggest weekly plunge in more than two decades, as equities dropped on concern rate cuts by central banks aren't enough to boost world economies. Nickel, zinc and aluminum fell.

Asian stocks plummeted, and U.S. futures fell on concern the deepening credit crisis will push the global economy into recession. The MSCI Asia Pacific Index lost 7.3 percent to 85.56 by 12:22 p.m. in Shanghai, and was set for the biggest drop since the index was created on Dec. 31, 1987.

``The liquidity problem is posing a serious threat to the real economy,'' Zhao Kai, an analyst at Jinrui Futures Co., a unit of Jiangxi Copper Co., said by phone from Shenzhen today. ``Industrial metals including copper are likely to be hurt even more once the repercussions are fully felt by the manufacturing sector around the world.''

Copper for three-month delivery fell as much as 9.1 percent to $4,830 a metric ton on the London Metal Exchange, the lowest intra-day level since March 2006. The contract, traded at $4,880 a ton at 12:23 p.m. in Shanghai, heading for a 19 percent decline for the week, the biggest drop since April 1986 when Bloomberg started tracking the metal prices.

``Not only does U.S. consumption look as though it will be weak for longer, but European consumption has fallen quickly and sharply and we don't think the worst is over yet,'' Barclays Capital analysts led by Gayle Berry wrote in a report today.

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