SINGAPORE, Oct 31 (Reuters) - London metals extended losses on Friday following a 10 percent overnight slide in copper, and Shanghai futures hit their downside limit, following data that showed a contraction in the U.S economy. London Metal Exchange copper has fallen 35 percent so far in October and is heading for its biggest monthly drop since at least 1977, despite a 10 percent rise this week. U.S. gross domestic product shrank at a 0.3 percent annual rate in the third quarter as the sharpest pullback by consumers since 1980 overwhelmed the benefit from ramped-up government spending, the U.S. Commerce Department reported. More data is due later on Friday, including the Chicago Purchasing Managers Index for October, while on Monday investors will be on the watch for U.S. auto sales. By 0330 GNT copper fell 1.7 percent to $4,140, following a 10 percent fall in the previous session that came on the heels of a 13 percent surge on Wednesday. Many metals are down by more than 50 percent from record highs set just a few months ago and despite the pick-up this week, a number of producers have seen margins disappear and are facing losses if prices continue at these levels. "Most base metals have to recover from a demand and supply perspective. We will keep an eye on stockpiles and once they stop rising that will be a trigger for gains," Alex Passmore, mining analyst at Patterson Securities in Perth, said. But he added that volatility in commodities markets was likely to continue into next year. "Once credit markets unfreeze and people get used to new, lower asset prices, we should see volatility ease, but we will have to wait for Libor to come down, the U.S. election and even the Chinese new year in the first quarter of next year for that to happen." At the open Shanghai copper futures fell by their 5 percent threshold to 31,400 yuan ($4,592) and zinc hit its 6 percent threshold, falling to 8,930 yuan after the rally in London shuddered to a halt. Prices edged off their lows at midday, with copper at 31,560 yuan, down 4.7 percent from Thursday, and zinc at 9,145 yuan. The Chinese market has fallen even further than London, with copper dropping a record 41 percent so far in October, more than twice the loss seen in the next weakest month, June 1996. "Copper is limit up one day, limit down the next and it has managed to stay more less on par with London in the past few days. It will will keep tracking the LME as closely as it can, given the limits on trading," a dealer in Hong Kong said. Adding to worries are slowing exports from China, which are eating into the country's huge demand for commodities -- copper consumption growth next year is seen falling to 6 percent, one third the rate in 2007 -- and even a major fiscal package by Beijing will likely only slow the decline. Metals prices at 0330 GMT Metal Last Change Pct Move End 2007 Pct chg 08 LME Cu 4140.00 -70.00 -1.66 6670.00 -37.93 SHFE Cu* 31540.00 -1560.00 -4.71 56880.00 -44.55 LME Alum 2050.00 -15.00 -0.73 2403.00 -14.69 SHFE Alum* 14010.00 -445.00 -3.08 18180.00 -22.94 COMEX Cu** 188.85 0.00 +0.00 304.10 -37.90 LME Zinc 1150.00 -10.00 -0.86 2370.00 -51.48 SHFE Zinc 9145.00 -370.00 -3.89 18950.00 -51.74 LME Nickel 11500.00 -400.00 -3.36 26350.00 -56.36 LME Lead 1460.00 -60.00 -3.95 2550.00 -42.75 LME/Shanghai arb^ 1742 Dollar/yuan 6.8381 \ 6.8391 ** 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 ($1=6.838 yuan) (Reporting by Nick Trevethan;) tf.TFN-Europe_newsdesk@thomsonreuters.com cmr

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