* Zinc deficit seen deepening on mine closures
* Nickel falls after big stock build
* Dollar index drops to three-week low
(Recasts, adds quotes, updates prices)
LONDON, June 19 (Reuters) - Zinc touched the highest levels in 16 months on Thursday after recent data showed the market deficit had deepened, and investors expected it to deepen further as major mines shut down.
In other metals, copper and aluminium ticked higher, lifted by the dollar's fall to a three-week low, while nickel prices came under pressure from a build-up in stockpiles.
Three-month zinc on the London Metal Exchange LME) hit a high of $2,155 a tonne in heavy volume, the strongest since Feb. 20, 2013, before paring gains to $2,151.50 by 1355 GMT, a rise of 0.77 percent.
"We are unambiguously positive in our outlook for zinc prices," said Nic Brown, head of commodities research at Natixis. "We continue to think that the zinc market will experience a substantial deficit in 2014."
Data on Monday showed that the global zinc market was in a 107,000 tonne deficit in January to April, versus a deficit of 17,000 tonnes in January-March.
Brown's forecast of a zinc deficit this year of 476,000 tonnes is at the high end of analysts' estimates, but a decline in zinc inventories so far this year of 235,000 tonnes shows that it is close to the mark, he said.
Copper edged up 0.1 percent to $6,714 a tonne, and aluminium <CMAL3 gained 0.6 percent to $1,884.25, the highest in a week.
Helping gains was a drop in the dollar against a basket of currencies to its weakest level in three weeks after a cautious message from the U.S. Federal Reserve on Wednesday and after a fall in jobless claims on Thursday.
A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.
"The weaker dollar has helped lift prices this morning after the FOMC (Federal Open Market Committee) stayed pretty dovish," Societe Generale analyst Robin Bhar said.
The metal used in power and construction is down 8.5 percent lower from levels at the beginning of the year as doubts remain about the outlook for demand from top consumer China and on worries about tight financing for metals.
"Copper prices are not really showing much direction, particularly given concerns about China's economy ... Prices are likely to meander around these levels as we are going into the quiet summer period."
LME nickel fell 1.5 percent to $18,467 a tonne, extending losses after dropping 2 percent on Wednesday.
Nickel stocks in LME-registered warehouses surged by 19,242 tonnes across diverse locations in Asia to a record high on Wednesday, before dipping by just 618 tonnes on Thursday.
Traders said the deliveries reflected metal sold by producers when prices climbed above $20,000 last month.
The rise in stocks reminded investors that a ban on unprocessed ore by Indonesia, which spurred 35 percent gains this year, has not yet hit the refined market.
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
(Additional reporting by Melanie Burton in Sydney; editing by Pravin Char and Jane Baird)