Sept. 15 (Bloomberg) -- Crude oil fell to a seven-month low and gasoline tumbled after Lehman Brothers Holdings Inc. filed for bankruptcy and refineries along the Gulf of Mexico escaped major damage from Hurricane Ike.

Metals and crops also dropped, prompting a 5 percent slump in the S&P GSCI Index of 24 commodities, on speculation turmoil on Wall Street and the worsening credit crisis may weaken the global economy, cutting demand for raw materials. Refiners said preparations are under way to restart plants in the Houston area, home to more than 20 percent of U.S. refining capacity.

``Commodity markets are saying that financial market turbulence is yet another negative signal for the U.S. economy,'' said Mike Wittner, head of oil research at Societe Generale SA in London. ``The level of risk aversion in oil and commodities trading is only going to go higher.''

Crude oil for October delivery declined as much as $7.05, or 7 percent, to $94.13 a barrel in electronic trading on the New York Mercantile Exchange. That's the lowest since Feb. 14. The contract was at $96.27 at 1:55 p.m. in London.

Gasoline for October delivery fell as much as 24.46 cents, or 8.8 percent, to $2.5250 a gallon in New York

Zinc for three-month delivery fell as much as $176 a ton, or 9.3 percent, to $1,710 a metric ton on the London Metal Exchange, the steepest intraday decline since Nov. 19, 2007. Nickel slid 6 percent, extending this year's slide to 31 percent, the biggest drop of the exchange's six industrial metals.

Lehman Suspended

Lehman Brothers was suspended from energy and commodities trading in London after Europe's biggest clearing house declared the company a defaulter.

The London Metal Exchange, the world's largest copper bourse, the Liffe commodities exchange, and Intercontinental Exchange Inc.'s ICE Futures Europe, part of the second-biggest energy exchange, all suspended Lehman today. LCH.Clearnet Group Ltd., which clears trades, declared Lehman's European subsidiary a defaulter.

Valero Energy Corp., the largest U.S. refiner, said it found ``no significant structural damage'' at three Houston-area refineries shut before the storm.

Exxon Mobil Corp. said its Baytown refinery, the largest in the U.S., has power and damage appears ``limited,'' while it is checking its Beaumont, Texas, plant, which is without power. Royal Dutch Shell Plc said it was assessing its Texas plants and it was too early to say when they will restart.

Manufacturing Shrinks

Manufacturing in New York unexpectedly shrank in September, signaling companies worried over what the collapse in credit markets and cooling in consumer spending would bring even as orders and sales grew.

The Federal Reserve Bank of New York's general economic index fell to -7.4, the lowest reading since June, from 2.8 a month earlier, the bank said today. A reading of zero is the dividing line between growth and contraction.

The meltdown in mortgage lending that brought down Lehman Brothers Holdings Inc. today has caused banks to cut credit to households and businesses, leading to less spending. Shrinking economies in Europe and Japan and a strengthening dollar may also cause demand from overseas to dry up.

Corn for December delivery lost as much as 3.1 percent to $5.4575 a bushel, and soybeans dropped 3 percent to $11.66 a bus hel on the Chicago Board of Trade.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.

Last Updated: September 15, 2008 08:58 EDT