Aug. 17 (Bloomberg) -- Copper prices in Shanghai plunged on concern that losses in global financial markets will slow economic growth and reduce demand for metals.

The Morgan Stanley Capital International Asia-Pacific Index dropped 3.5 percent to 137.23 at 4:52 p.m. in Shanghai, extending three days of declines as losses on U.S. mortgages spread to other markets. Commodities, including metals, fell as investors shunned riskier assets or sold them to raise cash.

``What's happening in the global equities market due to U.S. subprime mortgage concerns is spreading to the metals markets,'' said Lin Yuhui, research manager at China International Futures Co. in Shenzhen.

Copper for October delivery on the Shanghai Futures Exchange fell as much as 2,800 yuan, or 4.4 percent, to close at 61,600 yuan ($8,098) a metric ton. The contract dropped 4 percent from the previous settlement in early trading, the maximum daily fluctuation allowed by the exchange.

Copper for immediate delivery in Changjiang, Shanghai's biggest cash market, lost as much as 3 percent to 62,100 yuan a ton today.

London Metal Exchange copper for delivery in three months rose 2.1 percent to $6,880 a ton at 4:58 p.m. Shanghai time, after slumping 7.8 percent to close at $6,740 a ton yesterday.

``It's just a technical rebound, helped by the recovery in the U.S. stock market last night,'' said Lin.

`Double Whammy'

The S&P 500 advanced 4.57, or 0.3 percent, to 1,411.27, while the Dow average lost 15.69, or 0.1 percent, to 12,845.78 after earlier falling 344 points. An index of metals traded on the London Metal Exchange fell 6.1 percent yesterday to 3,490.4, its biggest one-day drop since Jan. 4, 2005.

``Metals were hit by a double whammy overnight,'' Lin said, referring to weak U.S. housing starts and higher LME stockpiles.

U.S. housing starts declined 6.1 percent in July, more than economists projected, to an annual rate of 1.381 million, the government said yesterday. Builders are the biggest users of copper. Stockpiles of copper monitored by the London Metal Exchange rose for a second day, by 3,300 tons, to 119,350 tons yesterday, according to exchange data.

Zinc in Shanghai for October delivery fell 4 percent from the previous settlement, and 3.6 percent from the previous close, to 26,120 yuan a ton. October aluminum lost 1.5 percent to close at 18,970 yuan a ton.

Zinc for delivery in three months on the London Metal Exchange rose 1.8 percent to $3,045 a ton, while aluminum was 1.4 percent higher at $2,505 a ton at 5:02 p.m. Shanghai time.

Among other LME-traded metals, lead rose 2 percent to $2,860 a ton, and nickel traded 1.7 percent higher at $25,525 a ton. Tin was unchanged at $13,500 a ton.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

Last Updated: August 17, 2007 05:06 EDT