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Copper prices extended last week's heavy losses on Monday as rising stocks in London Metal Exchange warehouses heightened worries about a slowdown in demand.

The fall in copper dragged other metals lower, with lead, zinc and nickel falling by around 4 percent.

"The market has been in a downward channel during the past few weeks...things look weak both technically and fundamentally," a European LME trader said.

Copper futures for delivery in three months were at $5,485/5,505 a tonne at 1129 GMT, down from $5,611 at the close on Friday, when the market dropped by more than 2 percent.

"There is nothing really on the charts to support copper until $5,165," analyst William Adams at BaseMetals.com said.

A Macquarie report said prices would inevitably bounce back as most metals were oversold, but in the short term prices were seen drifting to around $5,000.

Copper's recent fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.

Stocks in LME-registered warehouses, seen as a gauge of demand, had risen by more than 12,000 tonnes over the past week.

Another 900 tonnes entered stores on Monday, taking the total to 195,775, the highest since March 2004.

Analysts said the market might change direction in mid-February, when the Chinese were likely to re-stock.

"Chinese New Year on 18th February should see new buying interest from consumers in both physical copper and copper concentrates," John Meyer at Numis Securities said in a note.

At the same time, traders said there was talk the Chinese had lowered their purchasing targets in copper.

"So maybe we will see less support than people hope and it could easily drift down lower fairly quickly," the trader said.

Goldman Sachs said prices could go higher again at the end of 2007 as global growth would pick up.

"While prices in the interim are likely to remain volatile, we continue to believe that prices will see renewed upside momentum towards the end of 2007 and the beginning of 2008," the investment bank said in weekly commodities note.

COPPER DRAGS OTHERS DOWN

On Friday the slide in copper dragged aluminium down by over 3 percent to a close at $2,610. Aluminium was indicated at $2,579/2,584 on Monday.

"If we can get back above $2,700...then the market could be looking quite bullish again," Adams at BaseMetals.com said.

Zinc was at $3,720/3,745, down 4.9 percent versus its close at $4,085 on Friday, when the metal dipped by a similar amount.

"The feeling is that zinc concentrates are becoming more available and there could be a lot of stock on its way to warehouses," another LME trader said.

Stocks in LME-registered warehouses rose by 725 tonnes to 90,975, up by some 7 percent since the start of December.

The Dow Jones AIG index with some $30 billion in assets was putting additional pressure on the markets.

"The re-indexing of the funds and the weakness of the oil price have triggered a lot of liquidation selling and it has caused a lot of CTA (Commodity Trading Advisor) types to go short," Adams said.

Nickel was down 3.8 percent at $31,850/32,000 versus $33,100, and tin was indicated at $10,450/10,550 against its last quote on Friday at $10,600/10,625.

Lead fell by 5.6 percent to hit $1,530 and was later indicated at $1,540/1,550 versus $1,620.