SINGAPORE, March 15 (Reuters) - London copper fell more than1 percent on Tuesday, after Japan warned of high radioactive levels following blasts at a quake-stricken nuclear plant, dampening sentiment across financial markets.
Japan's prime minister, Naoto Kan, said radioactive levels had become high around the Fukushima nuclear plant after explosions at two reactors, as a minute level of radiation was detected in Tokyo.
Japanese stocks plunged 10.6 percent, posting the worst two-day losing streak since 1987, while Brent crude oil fell 2 percent.
"The market fell into panic over the nuclear situation, as investors are unsure how serious the leak is and what the impact could be," a Shanghai-based trader said.
Three-month copper on the London Metal Exchange reversed early gains to shed 1.4 percent at $9,068.25 a tonne by 0701 GMT.
The volatile market has caused trading volume to spike, with the exchange's electronic trading platform registering over 8,500 lots, more than double its average volume during Asian hours.
Shanghai's most active copper futures contract ended down 1 percent at 68,630 yuan ($10,446), still off the three-month low of 68,250 yuan hit in the previous session.
The heavy sell-off has spilled from equities markets to commodities. Even spot gold , traditionally a popular safe-haven investment during economic and political uncertainties took a hit, down more than 1 percent to $1,407.69 an ounce.
The longer-term demand outlook for copper remained upbeat as Japan's reconstruction effort will need large amounts of copper, aluminium, zinc and other industrial metals, traders and analysts said.
"A lot relies on the reconstruction effort and the timing of the reconstruction effort in Japan," said Ben Westmore, commodities economist at National Australia Bank, adding that the Japanese government is already facing high debt and little scope for further expanding its loose monetary policy.
"But if you believe that the government is going to be in some kind of physical position to rebuild and reconstruct, it is going to have positive influence on base metals over the next few years."
The yen surged on Tuesday after Japan's prime minister said radiation levels near a quake-stricken nuclear plant had become high and the risk of further nuclear leakage was rising, prompting investors to dump risky assets.
Shanghai aluminium dropped to a nine-month low of 15,640 yuan, before closing 1.3 percent lower at 16,445 yuan.
LME aluminium shed 1 percent at $2,529.
Base metals prices at 0701 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9068.25 -126.75 -1.38 -5.54
SHFE CU FUT MAY1 68630 -650 -0.94 -4.48
LME Alum 2529.00 -26.00 -1.02 2.39
SHFE AL FUT MAY1 16445 -220 -1.32 -2.35
HG COPPER MAY1 413.75 -4.65 -1.17 -6.80
LME Zinc 2314.00 -16.00 -0.69 -5.70
SHFE ZN FUT MAY1 18035 -10 -0.06 -7.39
LME Nickel 25649.00 -201.00 -0.78 3.63
LME Lead 2500.00 -20.00 -0.79 -1.96
LME Tin 29500.00 -400.00 -1.34 9.67
LME/Shanghai arb^ 1079
Dollar/yuan 6.5702 \ 6.5704