SINGAPORE, Oct 23 (Reuters) - The four-day slide in metals gathered pace on Thursday, with copper down 7 percent and nickel tumbling to a five-year low, as recession fears hammered sentiment towards industrial raw materials. Gloomy demand prospects and gains in the dollar to a two-year high have knocked commodities, many of which have collapsed since hitting record highs earlier this year. "There is still room for prices to fall even though many are below marginal costs of production," Yingxi Yu, analyst at Barclays Capital, said. She noted sentiment across markets was bearish and there was growing evidence that the financial crisis was spreading to the real economy. "The events in the past few weeks have resulted in acute downgrades, not only for OECD countries, but to developing economies too and of course for commodities, the most important one is China. Our 2009 forecast for China's GDP growth has been cut from 9.5 percent to 8.5," Yu added. Commodities markets weren't the only ones in pain. Asian stocks dropped to a four-year low, with the MSCI index of Asia-Pacific stocks outside Japan down 5.9 percent to the lowest since October 2004. Japan's Nikkei share average slumped 6 percent, having now fallen 21 percent in October, and the resource-heavy ASX 200 in Sydney fell 4.2 percent. London Metal Exchange copper for delivery in three months dropped 7 percent to $3,870 a tonne at 0355 GMT, and earlier touched a three-year low of $3,851, while nickel dropped as low as $9,200, its weakest since August 2003. Nickel is down more than 80 percent since hitting a record peak in May 2007 and copper is down 57 percent from its July peak. "The market was only going to move one way as the dollar gained. It has to steady at some point, but where that is, is unclear," a trader in Hong Kong said. "We are looking at support at $3,800 in copper to hold, unless the dollar rises more -- then that technical level will break very easily." Shanghai copper fell by its 6 percent limit to 33,900 yuan, its weakest since August 2005, zinc also shed 6 percent to a new lifetime low for the benchmark, at 9,210 yuan, while aluminium lost 4 percent from Wednesday's settlement. Copper and zinc have fallen by their daily limits three days running and under exchange rules will be suspended on Friday for one day. Traders said the exchange may again force the close out of some positions. Earlier this month, the Shanghai Futures Exchange ordered traders to close positions in 10 copper futures contracts after three days of limit falls, in an effort to restore order to the market that was effectively frozen by a precipitous decline in London copper prices. Other LME metals also lost ground. Aluminium fell 1.4 percent to $1,975, as worries about oversupply overcame the growing likelihood of large-scale cutbacks from producers struggling with shrinking margins. Aluminum Corp of China Ltd (Chalco) aims to cut its primary metal output by 18 percent annually as China's largest producer of the metal struggles with falling prices and a high cost base. The reduction would remove about 720,000 tonnes of metal from the world market -- about 1.6 percent of global production -- and the company said it may cut production further depending on market conditions. Base metals prices at 0359 GMT Metal Last Change Pct Move End 2007 Pct chg 08 LME Cu 3870.00 -290.00 -6.97 6670.00 -41.98 SHFE Cu* 33900.00 -2170.00 -6.02 56880.00 -40.40 LME Alum 1970.00 -32.00 -1.60 2403.00 -18.02 SHFE Alum* 13185.00 -515.00 -3.76 18180.00 -27.48 COMEX Cu** 185.10 0.00 +0.00 304.10 -39.13 LME Zinc 1070.00 -70.00 -6.14 2370.00 -54.85 SHFE Zinc 9210.00 -590.00 -6.02 18950.00 -51.40 LME Nickel 9250.00 -750.00 -7.50 26350.00 -64.90 LME Tin 11000.00 -550.00 -4.76 16400.00 -32.93 LME/Shanghai arb^ -2867 Dollar/yuan 6.8360 \ 6.8370 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Reporting by Nick Trevethan; Editing by Michael Urquhart) Reuters 3000Xtra subscribers can access Metals Production Database by clicking on URL below http://mpd.session.rservices.com For related news and prices, click on the codes in brackets: LME price overview COMEX copper futures Base/minor metals news All metals news All commodities news Metals diary Foreign exchange rates SPEED GUIDES Keywords: MARKETS METALS/

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