* Copper hits lowest point since September 2005
* Global equity markets plunge, dollar at two-year high
* British economy shrinks 0.5 pct in Q3, more than expected
(Recasts, adds NEW YORK to dateline, updates with New York closing copper prices, adds trader comments)
By Chris Kelly and Michael Taylor
NEW YORK/LONDON, Oct 24 (Reuters) - Industrial metal copper plunged to its lowest level since September 2005 on Friday, as the dollar strengthened and equity markets nose-dived on the growing threat of a worldwide recession.
Copper MCU3 for three month delivery on the London Metal Exchange fell to a low of $3,665 a tonne from $4,040 at the close on Thursday. It pared losses to close at $3,775.
The three-month copper contract posted its biggest weekly fall — more than 20 percent — since at least 1977, according to Reuters data. It has slumped over 50 percent since July’s record high of $8,940.
In New York, copper for December delivery HGZ8 settled down 11.80 cents, or 6.5 percent, at $1.6865 a lb on the New York Mercantile Exchange’s COMEX division.
The session range spanned $1.88 to $1.6560 — the lowest level for a third-month position dating back to September 2005, based on a continuation basis.
Negative sentiment swept through global markets, as Asian, European and U.S. equities collapsed amid heightened fears of worldwide recession.
“Right now we are in a climate of correlation,” said Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California, referring to the cross-asset liquidation pressure.
“Metals are not trading on their own fundamentals as much as they are trading as a sector of the market as a whole,” he said.
The dollar surged to a fresh two-year peak against a basket of currencies as dismal economic data from Europe heightened fears of a global recession. [USD/]
The British economy shrank 0.5 percent in the third quarter of 2008, more than expected and the first fall in 16 years, official data showed, stoking fears of a painful and prolonged recession. [ID:nONS003869]
A stronger dollar makes metals more expensive for local currency holders.
“The strength of the dollar is pushing metals further south,” said John Meyer, analyst at investment bank Fairfax.
The metal, used in power and construction, was also pressured by data that showed sales of new homes in the United States fell in August to their lowest point in more than 17 years. [ID:nN24459259]
“There is a slew of pretty poor corporate news and macro data — a realisation that things are going to get quite tricky,” said Simon Toyne analyst at Numis.
Recession worries pushed the Reuters-Jefferies CRB index .CRB, a global commodities benchmark, to five-year lows on Friday. [ID:nN24362832]
ALUMINIUM TOUCHES 3-YR LOW
Aluminium slipped to $1,927, its lowest since October 2005 and closed at $1,975 from $2,006. Widely used in transport and packaging, the metal has come under pressure in recent weeks on news of deteriorating car sales data from auto makers.
Stocks of aluminium rose 2,875 tonnes to 1.5 million tonnes in London Metal Exchange warehouses, while copper added 2,725 tonnes to 211,975 tonnes.
“Given the performance of nickel and zinc prices, more weakness is certainly possible...The price slump is prompting most producers to review their operations,” said Deutsche Bank in a note on aluminium.
Nickel MNI3, the only industrial metal that ended the day higher, closed up $650 at $10,000. It jumped to $10,299 a tonne earlier as buyers took advantage of prices at five-year lows.
Prices of the stainless steel material have slumped more than 60 percent this year and some miners have been forced to cut back output or delay projects as prices have fallen below the marginal cost of production.
Nickel exploration company Regency Mines Plc (RGM.L) said it would stop drilling at its Mambare project at 4,000 metres rather than the originally planned 10,000 metres because of market conditions. [ID:nWLA1264]
Zinc MZN3 closed at $1,165 from $1,200. Tin MSN3 fell more than 14 percent to $10,300 — its lowest since January 2007 — but pared losses to close at $11,750 from $12,000.
Lead MPB3 was quoted at $1,270 from $1,271.
Metal Prices at 1856 GMT Metal Last Change Pct Move End 2007 Ytd Pct
move LME Cu 3715.00 -325.00 -8.04 6670.00 -44.30 SHFE Cu* 0.00 -33900.00 -100.00 56880.00 -100.00 LME Alum 1959.00 -43.00 -2.15 2403.00 -18.48 SHFE Alu* 13750.00 -165.00 -1.19 18180.00 -24.37 COMEX Cu** 167.50 -12.05 -6.71 303.05 -44.73 LME Zinc 1135.00 -65.00 -5.42 2370.00 -52.11 SHFE Zinc* 0.00 -9210.00 -100.00 18950.00 -100.00 LME Nick 9750.00 400.00 +4.28 26350.00 -63.00 LME Lead 1247.00 -28.00 -2.20 2550.00 -51.10 LME Tin 11700.00 -300.00 -2.50 16400.00 -28.66 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by Julie Crust in London; Editing by Marguerita Choy)