Metals plunge as much as 10 pct as panic spreads

By Nick Trevethan

SINGAPORE (Reuters) - London copper futures plunged 9 percent on Friday, trading at a new 2- year low, and nickel fell 10 percent to its weakest in three years after crumbling equity markets fanned fears about global growth, and deepened fears the world was slipping into recession.

Lead, zinc, tin and aluminium also tumbled and Shanghai metals hit their down limits as trading screens in markets around the world were swamped in a sea of red.

Japan's Nikkei stock average plunged 9.5 percent, with panic seizing investors after Wall Street saw its seventh day of falls. The resource-heavy ASX 200 in Sydney dropped 7 percent and oil prices tanked to a one-year low.

Even a Wall Street Journal report on Friday that the U.S. government was weighing guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits, in a bid to unfreeze bank lending failed to stem the blood-letting.

"It's one-way traffic. The panic emanating from stock markets is spreading. Our guys in London say copper could fall to $3,000. On the charts, $3,500 to $4,000 look credible," MF Global analyst Edward Meir said.

"But people are ignoring charts. What looks like strong support crumbles in this environment."

By 0440 GMT, London Metal exchange copper fell $465 to $4,850 a tonne, after dipping as low at $4,830, its weakest since March 2006.

"Once the market dropped to $5,250, a broker stopped out 200 lots and the market hit $5,000, triggering more stops, and the market dumped 9 percent in less than an hour," a dealer in Singapore said.