METALS-Copper rally falters after 7-month high as producers hedge

    * Copper touches seven-month peak before reversing
    * Nickel gains 1.8% to two-week high
    * GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

 (Updates with closing prices)
    By Eric Onstad
    LONDON, Dec 12 (Reuters) - Copper prices pulled back from
fresh highs on Thursday as miners hedged to take advantage of
the strongest levels in seven months.
    Benchmark copper on the London Metal Exchange         clawed
higher to $6,174 a tonne, the highest since May 10, before
reversing and ending floor trading at $6,155, down $1.
    "We're really surprised copper has been so strong. I think
it was from the rhetoric coming from Trump about China, plus
we've had a lot of good data, particularly on the jobs side,"
said Sucden Financial broker Robert Montefusco.
    U.S. President Donald Trump said on Thursday the United
States was "very close" to nailing down a trade deal with China.
               
    "We're likely to see a lot of the producers selling up here.
Late yesterday there were some upside (option) calls being sold,
which was putting some pressure on the market," Motefusco added.
    
    * SHANDONG: Also weighing on copper was news that Shandong
Fangyuan Nonferrous Metals Group, one of China's biggest private
copper smelters, denied online speculation that it had filed for
bankruptcy and said operations were running normally.
            
    Traders said the rumours had helped to support prices this
week because some investors expected shortfalls if Shandong
closed.
    * NICKEL STOCKS: London Metal Exchange nickel on-warrant
inventories MNISTX-TOTAL - material not earmarked for delivery
- soared by 52% in one day to 102,036 tonnes, the highest since
Aug. 29, LME data showed.
    Sucden's Montefusco said that recent inflows of nickel
stocks could be linked to Chinese arbitrage activity and more
deliveries are expected in the coming days.
    LME nickel prices         closed 1.8% higher at a two-week
high of $14,100 a tonne.
    
    * ALUMINIUM INVENTORIES: LME on-warrant aluminium stocks
MALSTX-TOTAL climbed by 23,075 tonnes to 1,218,125 tonnes, the
highest since March 2017, data showed.
    LME three-month aluminium         shrugged off the inventory
gains to firm by 0.9% to $1,775 a tonne in final open-outcry
trading.
    * ALUMINIUM SPREAD: LME cash aluminium moved to a discount
of $8.75 a tonne to the three-month contract CMAL0-3 this week
after holding at a premium for nearly a month, indicating
healthier supplies in the LME system.
    * LEAD POSITIONING: Lead has the largest net speculative
short position on the LME at 25% of open interest, according to
estimates from broker Marex Spectron.  
    * PRICES: LME zinc         advanced 1.9% to $2,263 a tonne
in closing rings, while lead         added 0.1% to $1,938 and
tin         dropped 0.2% to $17,250.
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 (Additional reporting by Mai Nguyen in Singapore
Editing by David Evans and Lisa Shumaker)