SINGAPORE: Oil touched multi-month lows and copper slid on Thursday as the lack of more aggressive steps by the Federal Reserve to lift the US economy and another sign of a slowdown in China dragged down commodities.

Data showing manufacturing activity in China, a major commodity buyer, shrank for an eighth straight month in June, pushed prices further into the red, increasing the selling pressure sparked by dismay that the US central bank opted for a modest stimulus measure.

Brent crude sank to its lowest in 18 months, U.S oil hit its weakest since October, and copper fell more than 1 per cent as the poor Chinese data and the absence of a signal that the Fed would launch a third round of quantitative easing only dimmed the outlook for raw material demand further.

“We are seeing a risk-off day,” said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.

The slide in commodities began on Wednesday, a day after they posted their biggest rally in four months, reflecting the nervousness engulfing investors with Europe trapped in a debt crisis, China slowing and the US economy faltering.

“I don't think in the next couple of months that any rally will be monotonic. Nothing can be sustained in the current environment,” said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

Brent crude for August delivery fell 46 cents to $92.23 a barrel by 0528 GMT, after falling to as low as $91.98, its weakest since Dec. 20, 2010.

Front-month US crude was down $1.09 at $80.36 a barrel, after hitting an eight-month low of $80.11.

The HSBC Flash Purchasing Managers Index, the earliest monthly indicator of China's industrial activity, fell to a seven-month low of 48.1 in June, with export orders and prices turning in their weakest showing since early 2009.

China is the biggest consumer of most base metals, including copper, and uses the most oil after the United States.

But while the data added to investors' woes, market optimism that Beijing has the ability to pump up its economy helped keep the selling pressure in check.

“Unlike the US or Europe, the Chinese government has more tools at its disposal to stimulate the economy,” said Michael Creed, economist at National Australia Bank.

“They've certainly got a lot of money sitting in reserves.”

Copper fell 1.3 per cent to $7,447.25 a tonne, after hitting a one-week trough of $7,430 earlier. Nickel dropped 1.6 per cent to $16,920.

Spot gold was off 0.2 per cent at $1,602.95 an ounce, falling for a third day in a row on disappointment over the Fed's action.

Corn led US grains lower, with the Chicago December contract down 1.6 per cent at $5.57-1/4 a bushel amid the broad-based market weakness.

Despite the fall, new-crop corn remains up 10 per cent on the week - most of its gains made on Monday and Tuesday - on concerns dry weather across the US Midwest would further damage crop quality and threaten yields.