* Price outlook ultimately depends on demand growth * China, Asia have more policy levers * Gold price trend seen increasingly hard to comprehend By Pratima Desai LONDON, Oct 20 (Reuters) - Copper tumbled to two-week lows on Thursday as fears of an escalating euro zone debt crisis, the damaging consequences for global economic growth and concern about a China slowdown hit investor sentiment. Gold touched $1,608.40 an ounce, its lowest in more than two weeks. Brent oil fell to $107.65 a barrel, its lowest since Oct. 11, but later recovered as the market focussed on tight supplies and low inventories. Benchmark copper on the London Metal Exchange tumbled 4 percent to $6,915 a tonne. A recovering dollar after a newspaper report that the German government had not ruled out a postponement of the EU summit planned for this Sunday and U.S. jobs data also undermined sentiment in commodity markets. Optimism had been growing that a pending weekend meeting of European Union leaders in Brussels would come up with a substantial plan for dealing with the debt crisis, primarily through ramping up the bloc's bailout mechanism, the EFSF. But French President Nicolas Sarkozy said on Wednesday that plans to tackle the crisis had stalled with Paris and Berlin at odds over how to increase the bailout fund. Investors worried about European politicians' lack of decisive action are retreating further into cash and out of risky commodities, where the price outlook ultimately depends on demand growth. "Growth expectations have been coming down not least because of events in Europe, which is the main focus in the market right now in terms of approaching deadlines," said Andrew Cole, a fund manager, Baring Asset Management. An EU summit set for Sunday will attempt to come up with a plan to tackle the sovereign debt and banking crisis. "There is some recognition that over the next 12 to 18 months recession across much of Europe is likely," Cole said. "Perhaps more concerning have been developments in China where growth is seen as being a bit slower and inflation is still a problem." Third-quarter economic growth in the world's second-largest economy slowed to 9.1 percent from a year earlier, the third consecutive quarterly slowdown in growth after 9.5 percent in the second quarter and 9.7 percent in the first. However, analysts and fund managers are more optimistic for growth in China and Asia as the authorities there have more policy levers than in the euro zone where interest rates are set by the European Central Bank. A common currency means individual euro zone countries cannot employ a depreciating currency strategy, which would help boost exports and growth. A Federal Reserve report suggesting the U.S. was barely growing in September also sapped sentiment. OIL BUCKS THE TREND Copper prices have dropped about 30 percent since a record high of $10,190 a tonne hit in February. It was at $6,999 a tonne at 1302 GMT. The metal used in power and construction is heavily reliant on China, which consumes about 40 percent of global demand estimated this year at around 20 million tonnes. "As long as the news situation remains negative, metal prices should stay under pressure for some time yet," Commerzbank said in a note. "Gold has retreated this morning, along with commodities and equity markets, for the fourth straight day ... Given the bearish news situation and continued high uncertainty, gold's current price trend is increasingly hard to comprehend." Gold traditionally is used as a refuge by investors worried about financial and economic turbulence and inflationary pressures often triggered by rising oil prices. Spot gold was at $1,622.29 an ounce from $1,641.30 an ounce late in New York on Wednesday, while Brent crude was up 0.36 percent at $108.78 a barrel. Oil has proved more resilient than other commodities. Traders said Brent was being underpinned by short supply due to ongoing production problems in the North Sea. "A lot of the strength ... is being driven by the fact that there are cargoes missing from the programme and we expect to see some missing from next month's as well," a trader said. "The North Sea is going through a bit of an adjustment - UK investment has dropped off very substantially in the last few years. That will have an effect." U.S. crude is benefiting from Wednesday's bullish data from the U.S. Energy Information Administration. Both crude and oil product stocks in the world's biggest oil consumer fell sharply last week as crude imports reached a 10-month low and refineries cut processing rates.

Source