* Nickel outperforms in Oct, up on Indonesian ban
* Pan Pacific sets most 2014 China copper premiums at $123/T
* Euro at two week low vs dollar
(Updates prices, adds comment)
LONDON, Nov 1 (Reuters) - Copper steadied on Friday, with strong Chinese manufacturing data helping to cement hopes of economic stability in the world's top metals consumer, although further gains were capped by a strong dollar.
China's manufacturing sector grew at its fastest pace in 18 months in October, the official Purchasing Managers' Index showed, while a private sector report showed a jump in new export orders.
Three-month copper on the London Metal Exchange traded at $7,255 a tonne at 1607 GMT, not far from a close of $7,250 on Thursday.
"We had the slightly better PMI overnight, which saw copper go up $20 in an instant on the back of that," Marex Spectron analyst Vicky Sanders said.
Keeping gains in check, however, was a drop in the euro to a two-week low after strong U.S. manufacturing data.
A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.
The U.S. manufacturing sector expanded at its fastest pace in years in October despite a partial government shutdown during the first half of the month, according to one industry report.
Copper struck a one-week peak at $7,300 on Thursday but that was still within a $7,000-7,420 band in place since early August. The metal finished October down around 1 percent.
Reflecting some expectations of robust copper demand next year, Pan Pacific Copper, a unit of JX Holdings Inc, set 2014 copper premiums for Chinese buyers mostly at $123, up 45 percent from this year, a company spokesman said.
Analysts, however, warn that the pickup in demand may not be enough to prevent the copper market from falling into a surplus which is likely to weigh on prices.
"Although stronger demand going into 2014 will likely reduce some of this excess, it likely will not be strong enough to nudge the markets towards a balance or a deficit type of situation," said Ed Meir, analyst at INTL FCStone.
Nickel had outperformed the base metals complex in October, rising more than 4 percent for the month, as traders positioned themselves for an export ban by Indonesia scheduled for next year.
Benchmark nickel traded at $14,537 a tonne, from $14,630 at the close on Thursday.
"On nickel, it felt like people were putting bets on the Indonesia ban coming into place. But our view is the ban will not be enforced in its current format but will likely be watered down," analyst Joel Crane at Morgan Stanley in Melbourne said.
Indonesia, the world's top exporter of nickel ore, has said it plans to ban exports of unprocessed ore from January 2014.
That potential ban and production cutbacks could lift the price of this year's worst-performing base metal by more than 20 percent from multi-year lows, analysts said.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
($1 = 6.0945 Chinese yuan)
(Editing by Jane Baird and Keiron Henderson)