Severstal leads Russia share dive in London

MOSCOW Oct 27 (Reuters) - Falling demand for metals and forced investor selling sheared off a third of steelmaker Severstal's (CHMF.MM)(CHMFq.L) value on Monday, with miners leading steep losses in London-traded Russian shares.

Falling industrial metals prices accelerated losses in Russian miners as panic selling spread through emerging market stocks.

"Russia and metal stocks are toxic," a trader at a major western bank said.

By 1358 GMT, Severstal shares were down 37.46 percent, closely followed by other steel names, and is now down 83 percent for the year to date. NLMK (NLMKq.L) fell 22.81 percent and Evraz HK1q.L fell 17.75 percent.

Investors, fearful of Russia risk, dumped stocks in London while Moscow exchanges remained shut following a limit-down suspension. Unless the regulator issues special orders, local exchanges cannot open until Tuesday.

Repeated stock market suspensions, lasting from an hour to more than a day, have added to investors' misgivings about Russia, at best forcing them to shift trading to London and at worst leaving them in the dark about the value of their assets.

Many industrial metals fell to multi-year lows on the London Metals Exchange. Copper led falling commodities prices with a 5 percent decline [MET/L].

Traders said investors were ignoring news that Severstal had successfully renegotiated the purchase price of U.S. acquisition PBS Coals, as well as a steep target price downgrade from JP Morgan, which cut Severstal to $5.30 from $22.

Investment funds were selling Severstal to raise cash as investors pulled money out of the stock market, another trader said.

"There are three sellers and each of them has to sell regardless of the price," a trader at a Russian brokerage said. "Margin calls can happen anywhere, but these look more like redemptions." (Reporting by Melissa Akin and Polina Vorobieva; editing by John Stonestreet)