By Claudia Carpenter Oct. 22 (Bloomberg) -- Copper fell for a third straight day, leading declines in all industrial metals on the London Metal Exchange, as a slowdown in world economic growth reduces demand from industry and increases stockpiles. Rising inventories may push copper down 58 percent from this year's average to $3,250 a metric ton, Andrew Keen, an analyst at Sanford C. Bernstein Ltd., wrote in a note today. Copper in warehouses monitored by the exchange jumped 62 percent in the third quarter. ``If you're genuinely that bearish on the outlook for the global economy, then the copper market looks like a great short,'' or bet on lower prices, Keen said in a phone interview from London today. ``The key thing we're saying is we see support at $3,250, which is about 30 percent under where the market is.'' Copper for delivery in three months declined $143, or 3.2 percent, to $4,355 a metric ton by 10:56 a.m. on the LME and earlier fell to $4,270, the lowest since Dec. 15, 2005. Prices have declined 32 percent this month as industrial production dropped in the U.S. and slowed in China, the world's largest users of the metal. BHP Billiton Ltd., the world's largest mining company, dropped as much as 8.8 percent in London Stock Exchange trading after saying ``uncertainty'' will persist in China. The euro fell below $1.28 for the first time since November 2006 and the pound dropped to a five-year low on speculation European central banks will cut interest rates as the global economy heads for a recession. Production Costs Bernstein forecasts copper will trade at about $4,200 a ton in 2009, with a supply surplus of 500,000 tons. The marginal cost of producing copper is about $3,250 a ton, Keen said. ``There are risks to production coming on and we think copper deserves a scarcity premium,'' he said. Production from Escondida, the world's largest copper mine, slumped 32 percent in the third quarter from a year earlier because of declining ore grades and electrical failures, owner BHP said. Inventories of copper rose 1,850 tons, or 0.9 percent, to 207,750 tons, the LME said in a daily warehouse report. Copper inventories have climbed 5.2 percent this year while supplies of nickel are up 16 percent and aluminum has jumped 61 percent. BHP said today it expects its Kwinana nickel refinery in Australia to return to full capacity by the end of this month. The refinery, the third-largest producer, was shut for maintenance in June. ``Just what the world needs -- more nickel,'' UBS AG analyst John Reade wrote in a note today. Nickel, used to make stainless steel, dropped $127 to $10,573 a ton. Posco, Asia's biggest maker of stainless steel, is slashing output by 30 percent in the fourth quarter amid slowing demand. Lead fell $70 to $1,300 a ton and zinc slid $15 to $1,150. Tin dropped $300 to $12,000 a ton and aluminum declined $11 to $2,065 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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