* Commodity markets fall sharply, tracking equity exodus
* Equities see steepest drop in years on recession fears
* Copper sheds 7.5 pct, oil at 13-month low and gold wilts
By Nick Trevethan
SINGAPORE, Oct 16 (Reuters) - The dramatic sell-off in commodities gathered pace on Thursday following fresh signals about a deteriorating world economy and slowing demand from leading consumers, pulling down oil 3 percent, copper 7.5 percent and rubber 9 percent.
Even plunging equities and economic uncertainty failed to support gold, seen as a safe haven at times of turmoil, pushing down prices by 1 percent. U.S. corn futures dropped nearly 2 percent to a 10-month low, while soybeans fell to a 13-month low.
Bleak U.S economic data and warnings from the U.S. Federal Reserve that tough times are not over led Wall Street to its weakest day since the 1987 stock market crash, wiping out earlier optimism about government steps to avert a financial meltdown.
Japan's Nikkei index dropped more than 11 percent on Thursday. Asian stocks outside of Japan .MIAPJ0000PUS fell nearly 8 percent and Rio Tinto (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research) and BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) lost 16 and 13 percent, respectively, on warnings of slowing Chinese demand for commodities because of the financial crisis.
"We think underlying demand for industrial raw materials will be sharply impacted by slowing growth," said Judy Zhu, commodity analyst at Standard Chartered in Shanghai.
"We are seeing slowing growth in China and emerging markets, and a slowdown in the developed world," she added.
The Reuters-Jefferies CRB index .CRB tumbled 4.5 percent on Wednesday to its lowest in three-and-a-half years and fresh lows are likely unless markets managed a huge turnaround in European and U.S. trading.
U.S. crude for November delivery CLc1 fell $2.44, or 3.3 percent, to $72.10 a barrel by 0615 GMT. The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983.
"The oil markets are now highly correlated to the stock markets. Everyone now uses the stock markets to gauge the health of the economy," said Clarence Chu at U.S.-based options trader Hudson Capital Energy.
Crude has fallen more than 50 percent from its July peak above $147, and analysts have scaled back global demand growth estimates after a recent slew of gloomy data that has overshadowed OPEC's talk of possible production cuts and a hurricane that is disrupting Carribean refining operations.
Berstein Research also cut its forecast for 2009 oil prices to $70 a barrel from $90 a barrel as it expects global oil demand to shrink this year and next, allowing global spare production capacity to increase.
Demand fears have also weighed on base metal prices, overwhelming potentially bullish supply-side disruptions, including problems at the world's largest copper mine, Escondida, in Chile, owned by BHP Billiton and Rio Tinto. where an equipment problem could cut output by 15 percent for the next nine months.
Copper for delivery in three months on the London Metal Exchange fell 7.6 percent to $4,547 a tonne, having lost $378, or 7 percent, on Wednesday.
Shanghai copper SCFc3, zinc SZNc3 and aluminium SAFc3 all fell by their 4 percent daily limits at the opening, responding to London's weakness.
"We will see another downside limit in Shanghai copper tomorrow," said analyst Jane Jiang at Shanghai Nonferrous Metals Industry Association. "London copper is not likely to rebound strongly today. The momentum is very obvious."
"Merchants are selling copper as much as possible in Shanghai."
Gold snapped a two-day rally as its appeal as an inflation hedge faded in light of the sliding price of oil. Gold, which usually benefits from periods of economic and political turmoil, felt pressure a investors pared positions.
Spot gold fell to $838.10 an ounce, down 1.2 percent from New York's notional close on Wednesday, when it gained 1 percent.
"In the past, we would expect to see gold move up when stock markets tumbled, but this is not the case anymore. People think some of the financial institutions have to liquidate their long positions to cover losses," a dealer in Hong Kong said.
Platinum fell 3.7 percent, to near its lowest in almost 3 years, on fears of falling demand for autocatalysts after J.D. Power and Associates pegged October sales on track for a 17-year low with a sales rate below 12 million units. [ID:nN15310875]
Rubber stretched its losses as the price of TOCOM rubber JRUc5 fell nearly 9 percent to 132.2 yen per kg.
Thai RSS3, often used as a benchmark for physical prices, has fallen below $2 a kg from a 56-year peak of $3.25 in July.
By 0626 GMT, December corn futures Cc1 dropped 1.68 percent to $3.81-½ a bushel after settling in U.S. trade below $4 for the first time in 10 months, while November soybean futures Sc1 declined 1.19 percent to $8.47-¾ a bushel. (Editing by Sambit Mohanty)
