SHANGHAI: Copper prices crashed below $7,000 in London and by the daily limit in Shanghai as fears of a Greek default caused panic about a possible sharp slowdown in global demand for industrial metals.
Recent data showing slowing factory output in China and worries about local government debt has also raised concerns about the China-led global economic growth story.
Three-month copper on the London Metal Exchange fell 6.1 percent to $6,914.75 a tonne by 0705 GMT after suffering its sharpest weekly fall in nearly three years last week.
Other base metals in the complex also lost their footing, with LME lead and zinc hitting their lowest since July 20, 2010. LME tin tumbled nearly 9 percent, and nickel shed more than 6 percent.
Spooked by dismal market conditions, Chinese copper users, who had in the past supported prices by buying on dips on previous sell-offs, were mostly sitting on the sidelines ahead of a week-long national holiday next week.
The most-active December copper contract on the Shanghai Futures Exchange halted trading after diving 7 percent against its previous day's settlement price to 53,320 yuan ($8,345.725) per tonne, the lowest since July 21, 2010.
"Until policymakers come up with a long-term solution to address the debt crisis, the short-term prospects for copper and equities will remain bearish," said Phillip Futures analyst Ong Yiling.
Dongzheng Futures analyst Du Xiaohua noted that consumption by copper users in China has been lackluster over the last few days. While demand by big companies was steady, small ones have stopped buying due to shrinking bank credit and worries about the global economy.
"I think there is more downside from here. Investors are eyeing a possible deep global recession and that's offsetting any considerations about copper's fundamentals," he said.
The sell-off in global markets on Monday comes amid scepticism that Europe's latest efforts to contain its sovereign debt crisis can prevent it from wreaking more damage on the world economy.
Fears over the effect from a potential default from Greece, especially on the banking sector, as well as worries over a US economic slowdown have raised the spectre of a repeat of the market turmoil which followed the Lehman Brothers' collapse in 2008.
All eyes are now on what European policymakers would do to stop fallout from Greece's near default as well as how they would beef up their existing 440-billion-euro rescue fund.
The US dollar index , which is set against a basket currencies, eeked out a 0.16 percent gain on Monday, while spot gold fell 5.2 percent as investors bolted for the ultimate safe havens of cash and the dollar.
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