* Copper falls for a fourth straight day
* Spot gold declines as much as 2 percent
* Europe's stalled plan to expand fund's power spooks market
* Freeport-McMoRan cuts 2012 sales forecast
By Jane Lee
KUALA LUMPUR, Oct 20 (Reuters) - Copper and gold led a commodities plunge on Thursday as escalating worries about Europe's inability to resolve its debt problems drove investors away from riskier assets.
Plans to tackle the euro zone debt crisis have stalled with Paris and Berlin at odds over how to increase the firepower of the region's bailout fund, French President Nicolas Sarkozy said on Wednesday.
Comments by the Federal Reserve that the U.S. economic outlook grew dimmer in September further reinforced the dismal global economic view.
"The euro zone crisis does remain a key concern for the financial markets and there are murmurs that the Chinese economy could be facing some headwind," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney.
China's economy is set to slow more sharply than previously thought in 2012, with economists in a latest Reuters poll growing more pessimistic about how much a global downturn will impact the world's manufacturing engine.
London copper dropped for a fourth straight day, while gold was on track to see its biggest daily decline in two weeks. Brent crude hovered near $108 a barrel and grains extended losses.
Three-month copper on the London Metal Exchange tumbled 4 percent to $6,928.75 a tonne. Prices are headed for a drop of almost 8 percent this week after two consecutive weeks of gains.
The outlook for metals remained dour, underscrored by a cut in sales forecasts for next year by Freeport-McMoRan Copper & Gold Inc's . The world's biggest publicly traded copper producer, facing strikes at two of its mines, cited an uncertain global economic prospect.
The most-active January copper contract on the Shanghai Futures Exchange SCFc3 tumbled to as low as 50,950 yuan($7,989.024) per tonne in early trading, a 16-month low, after rising 0.4 percent in the previous session. It is on track for a 9 percent weekly loss, the biggest since week ended Sept. 25.
"Macroeconomic concerns continue to override those of fundamentals for copper investors, with the euro zone crisis being the chief worry," said Eric Liu, a trader at CITIC Newedge in Shanghai.
"The Fed's comment about dimmer U.S. economic outlook weigh down on sentiment but the main reason was Germany's overnight opposition to some details of the bailout funds."
France has argued the most effective way of leveraging the European Financial Stability Facility is to turn it into a bank which could then access funding from the ECB, but both the central bank and the German government have opposed this.
Shanghai December aluminium contract SAFc2 shed 1.8 percent, and earlier fell to its lowest in more than 10 months.
Oil prices also edged down, but losses were checked by data showing a surprise drop in crude and petroleum product stocks in the United States, the world's biggest oil consumer, last week.
Barclays Capital, which maintained its 2012 Brent crude price forecast of $115, said the supply side of the oil market is far weaker now than it was in 2008, but even as demand has moderated, both the OPEC and non-OPEC supply has fallen faster, resulting in substantial inventory drawdowns through the year.
ICE Brent for December LCOc1 was near $108 a barrel while U.S. crude CLc1 fell 0.4 percent to $85.80.
"Investors don't want to take positions until there is a clear sign of a resolution of the debt crisis," said Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo.
PRECIOUS METALS NOT SPARED
Precious metals were not spared by the broad selloff, with gold, silver and platinum all declining.
"We are likely to see more downside in commodities in the near term with the gloomy macroeconomic backdrop, but gold may hold up relatively well due to its safe-haven nature even though its commodity identity has been more pronounced lately," said Hou Xinqiang, an analyst at Jinrui Futures in Shenzhen, China.
Spot gold lost as much as 2 percent to a two-week low of $1,609.24 an ounce. U.S. gold GCcv1 dropped more than 2 percent to $1,611.20 an ounce, on course for its fourth day of decline.
The most-active gold futures contract on the Shanghai Futures Exchange dropped 2.3 percent to 332.66 yuan per gram, or $1,624.13 an ounce.
Technical outlook for spot gold has turned bearish and bullion may fall to $1,596 during the day, said Reuters market analyst, Wang Tao.
Spot platinum dropped 2.8 percent to $1,468.5 an ounce.
The most-active U.S. silver futures contract SIcv1 lost 2.3 percent to $30.56.
In the grains market, seasonal harvest pressure in the United States and improved planting weather in South America added pressure on soybean and corn values.
Chicago Board of Trade December corn fell as much as 1 percent to $6.32 a bushel and December wheat was down 1 percent to $6.13-1/2 a bushel. November soy lost 1.1 percent to $12.12 a bushel.
Soy dropped to $12.06-3/4 earlier in the session, the lowest since Oct. 11. Prices Sc1 have fallen 13 percent so far this year after rising 34 percent in 2010.
Financial markets are also getting worried about growth in the world's top soybean importer China, where economic expansion slowed in the third quarter to its weakest pace since early 2009. China's economy expanded 9.1 percent in the third quarter, down from 9.5 percent in the previous three months. (Additional reporting by Naveen Thukral, Rujun Shen and Carrie Ho; Editing by Himani Sarkar)