* Copper falls more than 5 percent, drags down other metals
* Aluminium touches fresh 3-year low
* Macquarie cuts 2009 copper outlook 43 percent to around $3,750

Copper tumbled more than 5 percent on Monday and aluminium sank to a 3-year low on a weaker consumption outlook for metals in the face of a global downturn.

European shares dived with miners among the 10 biggest losers on Britain's leading share index, the FTSE, with Kazakhmys and Xstrata down more than 7 percent.

"Demand bust the party -- it is exceptionally weak at the moment," said analyst Michael Widmer at BNP Paribas.

Copper for three-months delivery on the London Metal Exchange hit a record high of $8,940 a tonne in July this year.

But since then prices have more than halved to touch a low of $3,600 on Monday, down 5.8 percent since Friday's close.

The price of copper -- often seen as a key gauge of real economic activity -- closed at $3,660, down $160.

Last week, the metal often used in the power and construction industries touched $3,520 -- its weakest since September 2005.

Aluminium, a light metal widely used in transport, packaging and construction, struck a three-year low of $1,874 a tonne before closing at $1,890, down $35.

China will increase the VAT rebate on exports of aluminium sheet and strip, effective Dec. 1, the Ministry of Finance said.

Eugen Weinberg, commodity strategist at Commerzbank said the move would swell supplies further and result in another increase in inventory levels.

"This is likely to hit prices around the globe, as China is still the biggest exporter of steel and aluminium," he said.

On Monday, U.S. industrial production rebounded by a stronger-than-expected 1.3 percent in October after a downwardly revised September drop that was the biggest fall in more than 62 years, according to a Federal Reserve report.

But the Fed revised the September fall to 3.7 percent -- making it the steepest drop since a 5.0 percent decline in February 1946 as wartime production ended.

"People are very concerned ... it is not hard to forecast a decline in world industrial production until well into the second quarter next year," Widmer said.

Lack of demand is mirrored in the sharply surging LME copper stocks, up another 1,800 tonnes to 275,900 -- its highest level since February 2004. Stocks have risen nearly 40,000 tonnes so far in November alone.

A meeting of the Group of 20 major economies in Washington over the weekend did not produce common, concrete measures to avert the global slowdown, traders said.

"If it had an impact it was definitely a negative impact because most markets are down today," Widmer said.

The leaders agreed on a host of steps to rescue the global economy from the worst financial crisis in 80 years, but they left it to individual governments to tailor their responses to their own circumstances and troubled industries.

MACQUARIE CUTS FORECASTS

More doom and gloom came in a survey showing that the U.S. economy is in recession and will contract at a faster pace in the fourth quarter, extending the decline into early 2009.

The National Association of Business Economists' poll of 50 professional forecasters released on Monday found that real gross domestic product in the United States was expected to fall 2.6 percent in the fourth quarter and slump 1.3 percent in the first three months of 2009.

The picture was no different in Europe. The Confederation of British Industry forecast that Britain will suffer its sharpest economic contraction in almost two decades next year, and unemployment could rise to almost 3 million by 2010.

In tandem, Macquarie Bank joined the list of banks cutting their price outlooks for metals, slashing its 2009 forecast for copper by 43 percent.

"We now see surpluses developing in many of the major metal markets in the very near term, which is likely to sustain a strong shift in pricing and producer behaviour," Macquarie Research said in a note.

In other metals, nickel ended at $10,650/10,655 a tonne versus $11,000 on Friday, lead was down $79 at $1,271, zinc fell to $1,160 from $1,200 and tin slipped to $13,650/13,700 from $13,900.

Metals prices at 1722 GMT: Metal Last Change Percent Move End 2007 Ytd Percent

move LME Cu 3691.00 -129.00 -3.38 6670.00 -44.66 SHFE Cu* 28710.00 -710.00 -2.41 56880.00 -49.53 LME Alum 1883.00 -42.00 -2.18 2403.00 -21.64 SHFE Alu* 13790.00 50.00 +0.36 18180.00 -24.15 COMEX Cu** 165.25 -4.90 -2.88 303.05 -45.47 LME Zinc 1163.00 -37.00 -3.08 2370.00 -50.93 SHFE Zinc* 9680.00 -60.00 -0.62 18950.00 -48.92 LME Nick 10600.00 -400.00 -3.64 26350.00 -59.77 LME Lead 1277.00 -73.00 -5.41 2550.00 -49.92 LME Tin 13450.00 -450.00 -3.24 16400.00 -17.99 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN – Forexyard