Oil, metals retreat as recession fears haunt

* Shanghai copper sheds almost 4 percent as gloom returns

*Oil falls $2 on firm dollar, demand concerns

* Gold little changed, holds on to 2 pct gains By Naveen Thukral

SINGAPORE, Nov 11 - Oil, grains and industrial metals pulled back on Tuesday as fears of widespread recession overwhelmed cautious optimism over Beijing's $600 billion stimulus package.

Oil prices tumbled more than $2, Shanghai copper futures slid nearly 4 percent and soybeans lost 1.5 percent as more bad news dashed hopes of an early economic revival.

"It's very clear that things are slowing down. The package Beijing announced was pretty well telegraphed, and it's had a short-term impact, but bigger issues remain," said Mark Pervan, senior commodities analyst at ANZ Bank.

"I think there is more weakness to come. The housing, automotive and export markets remain a worry."

Asian stocks retreated after shares of General Motors sank to a 62-year low and brokerages forecast that Goldman Sachs will post its first-ever quarterly loss, stirring worries about the earnings damage to come as the global economy faces a recession.

The bankruptcy of No. 2 U.S. electronics retailer Circuit City added to the gloomy atmosphere.

U.S. light, sweet crude for December delivery fell $1.98 or 3.17 percent to $60.43 a barrel by 0552 GMT, ending a mild two day rally. Prices ended 2 percent higher on Monday after touching a near 20-month low of $59.10 a barrel.

News on Monday that Saudi Arabia had cut oil sales to major customers in Asia and Europe also failed to turn the tide on a market that has shed 60 percent of its value since hitting a record high above $147 a barrel in July.

Gold was little changed after rising 2 percent the previous day on China's economic plan. Investors were however reluctant to buy further after the gloomy outlook for the global economy was underscored by a renewed sell-off in equities and news that China's annual consumer price inflation had fallen to a 17-month low.

METALS DOWN, OPPORTINITY FOR SOME?

Shanghai copper futures shed nearly 4 percent and London prices ticked lower after a double-digit rally fizzled overnight. The benchmark third month Shanghai contract fell 1,190 yuan to 29,600 yuan a tonne.

China's announcement that it was planning a nearly $600 billion package focusing on infrastructure, along with expectations U.S. President-elect Barack Obama will push for more fiscal spending, spurred investor risk-taking on Monday.

"Investors are waiting for real measures to stimulate the economy," said analyst Wang Zheng at Everbright Futures. "Copper in Shanghai should see strong support under the 30,000-yuan level, but the upside depends on the recovery in the overall market, especially in equities."

And some analysts saw opportunity in weakening commodities prices.

"The current markets represents opportunities for governments to be able to source very cheap primary imports to establish good infrastructure for the coming generations," said Jonathan Barratt of Commodity Broking Services in Sydney.

"They are not going to get this (level for long) because once prices drop below the cost of production, people will not produce and the prices will go higher."

Grains mirrored losses in other commodity markets, including oil because of the use of corn and soybeans in making biofuels which compete with petroleum.

Benchmark Chicago Board of Trade November soybeans fell 1.62 percent to $9.24-¾ per bushel while December corn eased 1.24 percent to $3.78-¾ per bushel.

December wheat was down 0.63 percent at $5.16-¾ per bushel, having fallen 1 percent on Monday after the U.S. Department of Agriculture said global 2008/09 wheat production would be a record 682.4 million tonnes, up 2.2 million from an estimate made in October.