* London copper eyeing biggest weekly loss since Oct 2008 * Shanghai base metals fall by daily limit * Risk reduction extends on hazy economic outlook (Adds comment, updates prices) By Manolo Serapio Jr MANILA, Sept 23 (Reuters) - London copper extended losses in another brutal sell-off on Friday to hit its lowest in more than a year and is on course for its steepest weekly loss since October 2008 amid a bleak outlook for the global economy. Other base metals also sank, with nickel falling 11 percent and tin down more than 14 percent at one stage, while Shanghai-traded metals slid by their daily limit as investors liquidated risky assets with Europe struggling to contain a debt crisis, the U.S. economy in bad shape and China's manufacturing sector shrinking for a third month in a row. "The market's very uncertain at the moment so you're getting massive tweaks" in prices, said Citigroup analyst David Thurtell. "It's very much driven by data and sentiment, and sentiment at the moment is certainly not on the bull side." Three-month copper on the London Metal Exchange fell 7.3 percent to as low as $7,115.75 a tonne, a level not seen since August 2010. By 0717 GMT it stood at $7,296, down nearly 5 percent. Despite the steep drop in prices there were few buyers on dips, with top copper consumer China probably anticipating further declines. "I would have expected the Chinese to try to buy copper in order to replenish very, very low stocks that have been run down over the last year," said Thurtell. "But they seem to be pretty much absent. I suspect they think that there's further price falls so no need to rush." Friday's drop puts copper's two-day loss at more than 12 percent, after the metal slid 7.5 percent on Thursday, its biggest percentage fall since Oct. 30, 2008. For the week, copper is down around 16 percent, the widest since late October 2008, when it shed more than 21 percent in a week during the global financial crisis. OVERSOLD? "Technically copper appears oversold in the short term, but it would take a brave man to stand in front of this train," Citi said in a note. In Shanghai, the most active December copper contract fell by its 6 percent daily limit to 56,940 yuan a tonne, the lowest ever for the contract. Zinc, lead and aluminium futures also hit their downside limit for the day. Private sector business activity in Europe and China declined sharply this month, and new claims for U.S. jobless benefits remained high, crystallizing fears that the global economy could lapse back into recession. The major risk to the global economy is in Europe, with investors "generally unhappy with the lack of action in the euro zone in addressing its sovereign debt issues," said Natalie Robertson, an analyst at Australia and New Zealand. Meeting in Washington on Thursday, the world's major economies pledged to prevent the euro zone's debt crisis from undermining banks and markets but announced no new specific measures to shore up confidence in the global economy. Also fueling the sell-off from Thursday was data showing that China's manufacturing sector shrank for the third month in a row in September, although Citigroup's Thurtell said the Chinese economy is still strong and is "the only remaining beacon of hope for the commodities market at the moment." "We don't think the China PMI data actually warrants a hard landing story because real activity data isn't showing a sharp decline," said ANZ's Robertson. Following copper's lead, LME zinc hit a session low of $1,894 a tonne, its weakest since July 2010, and lead dropped to $2,001.25, a level unseen since August 2010. Tin at one point was down more than 14 percent to $17,000 a tonne, a low dating back to early July 2010, and nickel slid 11 percent to $16,800, its lowest since December 2009. Base metals prices at 0717 GMT Metal Last Change Pct Move YTD pct chg LME Cu 7296.00 -378.00 -4.93 -24.00 SHFE CU FUT DEC1 56940 -3320 -5.51 -20.75 LME Alum 2202.50 -25.50 -1.14 -10.83 SHFE AL FUT DEC1 16495 -485 -2.86 -2.05 HG COPPER DEC1 330.05 -18.80 -5.39 -25.66 LME Zinc 1935.00 -73.00 -3.64 -21.15 SHFE ZN FUT DEC1 15055 -800 -5.05 -22.70 LME Nickel 17754.00 -1126.00 -5.96 -28.27 LME Lead 2033.50 -71.50 -3.40 -20.25 SHFE PB FUT 14470 -775 -5.08 -21.14 LME Tin 18100.00 -1750.00 -8.82 -32.71 LME/Shanghai arb -2414 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Editing by Michael Urquhart)

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