By Claudia Carpenter Oct. 16 (Bloomberg) -- Copper fell for a second day in London as stocks in Japan plunged the most in 21 years, fanning speculation a global recession will slash demand for industrial metals. Aluminum rebounded from a three-year low. The Nikkei 225 index slumped 11 percent. The U.S. needs to accelerate steps to bail out financial institutions to help arrest plunging stock values, Japan's Prime Minister Taro Aso said in Tokyo. Copper has dropped 27 percent this year. ``It's a vicious circle with stocks and metals and it's hard to see where it's going to end,'' said Alex Heath, head of base- metals trading at RBC Capital Markets in London. ``Will it be a global recession for one, two, three or four years?'' Copper for delivery in three months fell $44, or 0.9 percent, to $4,876 a metric ton as of 1:43 p.m. on the London Metal Exchange. Prices earlier fell to $4,545 a metric ton, the lowest since Jan. 23, 2006. Aluminum for delivery in three months rose $25, or 1.2 percent, to $2,195 a ton, after falling as much as 2.5 percent to $2,114.85, the lowest since Nov. 29, 2005. Zinc, which has dropped 47 percent this year, is at $1,251 a ton. Strategic Resource Acquisition Corp. on Oct. 9 said it was preparing for an ``orderly suspension'' at its Mid-Tennessee zinc processing and mining unit because of low prices. At $1,200 a ton, 75 percent of the world's mines are operating at below total production costs, Heath said. The economy in China, the world's biggest user of copper and aluminum, is ``pausing for breath'' and exports will be affected by a recession in developed countries, Rio Tinto Group Chief Executive Officer Tom Albanese said yesterday. UBS Bailout The London Metal Exchange index of six metals is down 28 percent this year, heading for the biggest annual drop since at least 2001 after last month's bankruptcy filing of Lehman Brothers Holdings Inc. and government rescues of banks. UBS AG, Switzerland's biggest bank, was the latest bailout, getting 6 billion francs ($5.2 billion) of capital from the government. ``The focus is clearly on the impact of the inability of banks to provide finance. They don't want to fund,'' Heath said. ``As demand continues to slow, there is a generally endemic fear of global recession now.'' Copper will average $7,750 a ton in 2008 and $6,600 a ton next year, Natixis Commodity Markets Ltd. forecast in a report. Aluminum will average $2,100 a ton next year from $2,725 a ton this year. Copper stockpiles in warehouses monitored by the LME gained 400 tons to 212,025 tons and aluminum stockpiles jumped 9,225 tons to 1.47 million tons, according to the exchange. Lead fell $82, or 5.4 percent, to $1,433 a ton, tin declined $500, or 3.6 percent, to $13,550 a ton and nickel dropped $150, or 1.3 percent, to $11,750 a ton. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

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