Metals dive as recessionary chill freezes investors

By Michael Taylor

LONDON (Reuters) - Copper fell more than 9 percent to its lowest point since March 2006, while aluminium sank to its weakest level since December 2005 on mounting fears of a looming recession.

Markets across the globe have plunged as investors and traders have panicked, believing government and central bank efforts to shore up banks will not be enough to prevent a global recession and financial meltdown.

"There's probably more downside (to come) -- we've yet to see the downturn really being priced into these markets," said Michael Lewis, global head of commodities research at Deutsche Bank. "Obviously industrial metals and energy are the most exposed.

"The banking sector problem is now spilling over into other sectors ... it's obviously quite a powerful negative demand shock. Copper does look the most exposed."

Copper for three-months delivery on the London Metal Exchange traded at $4,890 in official rings from $5,315 at the close on Thursday and compared with a session low at $4,800.

Prices of the metal used in power and construction have fallen about 45 percent since a record high of $8,940 in July.

Copper is now very close to $4,000, the average cost of production, according to some analysts. Others say average costs are just above $3,000 a tonne.

Data showing a 59 percent surge in copper inventories at warehouses monitored by the Shanghai Futures Exchange also hit sentiment.