(Bloomberg) -- Commodities from copper to crude and cotton plunged as the emergence of a highly mutated Covid-19 strain raised concerns about the outlook for global demand and sent financial markets spiraling.

Industrial metals including zinc and nickel fell more than 3% in London, while oil futures tumbled below $69 a barrel and cocoa plunged 4.6% on Friday, when U.S. markets reopened after the Thanksgiving holiday. Sugar, wheat, coffee and corn also dropped. The Bloomberg commodity spot index fell 3.4% in its biggest decline since June.

The emergence of the new fast-spreading coronavirus strain is spurring concerns that fresh outbreaks will derail growth in the world’s leading industrial economies. Scientists say it carries a high number of mutations that could make it more effective at evading existing vaccines, with a World Health Organization panel set to discuss the variant later. Global markets sold off heavily, and even gold -- usually a safe haven for investors in times of turmoil -- wavered between gains and losses.

Industrial commodities were hit especially hard. For metals, the new strain creates fresh risks to the outlook for demand, imperiling a recent rebound in prices driven by chronic supply constraints that have led to sharp drawdowns in global inventories. For oil consumption, it represents the biggest threat to the recovery in consumption for several months.

Copper on the London Metal Exchange settled 3.5% lower to $9,460 a metric ton at 5:51 p.m. local time, its biggest drop in five weeks. Aluminum and nickel fell more than 3.7% and zinc settled 3.2% lower. In precious metals, bullion on the Comex rose than 0.1% to settle at $1,788.10 an ounce at 12:30 p.m. in New York. Spot gold was up 0.8%, while platinum, palladium and silver fell.

Investors across financial markets questioned whether new outbreaks could complicate central banks’ efforts to withdraw ultra-loose monetary policies. On Friday, traders rushed to cut back their bets on rate hikes, while safe-haven currencies rallied.

“Uncertainty about the possible consequences of the new virus variant clearly reminds the markets that this pandemic is not over yet,” Alexander Zumpfe, a senior trader at refiner Heraeus Metals Germany GmbH & Co., said in a note. “The gold price should remain supported in this environment and the topic of tapering should take a back seat for the time being.”

Iron ore futures also plunged more than 6% in Singapore, paring a weekly gain as caution crept back into the market. Aside from the risk posed by the new variant, there are other, ongoing ones in China’s property sector, while local governments have struggled to find good projects to spend their money on.

Benchmark Brent crude shed as much as 12%, the most since April 2020. OPEC+ could choose to pause its current planned output hike of 400,000 barrels a day or even cut output, according to UBS Group AG. The group will have to consider internal projections, published before the news of the variant broke, that showed an expected surplus early next year.

“This is a huge overreaction in terms of the market,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said in a Bloomberg Television interview. “This is the market pricing in the worst possible scenarios.”

In the soft commodities, raw sugar fell 2.9% in the biggest drop since July, while cocoa’s decline was the steepest since April. Cotton settled 3.5% lower in New York, its biggest drop in four weeks. 

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