METALS-Nickel gains on Philippine ban proposal, options expiry

* Philippine senator urges unprocessed ore export ban

* Nickel options expiry helps boost prices-analyst

* U.S. factory goods orders jump record 10.5 pct in July

(Adds details, quotes; updates prices)

LONDON, Sept 3 (Reuters) - Nickel prices climbed to a one-week high on Wednesday on news that a Philippine senator had urged a ban on unprocessed mineral ore exports and also following an options expiry in London.

Copper fell on higher exchange stocks and as investors downplayed signs of progress towards peace in eastern Ukraine.

Three month nickel on the London Metal Exchange hit a session high of $18,930 a tonne, the highest since Aug. 27, before paring gains to $18,829, up 1.5 percent, by 1425 GMT.

Prices, which are up by around one-third in the year to date, have mostly held within a $18,400 to $20,000 band since May.

The case to buy was bolstered by news that a Philippine senator had filed a bill urging a halt to exports of unprocessed mineral ores.

The proposed halt is similar to a ban introduced by Indonesia from January that led to a sharp spike in nickel prices and cut other ore exports.

Most analysts expect a deficit in nickel next year, and so the Philippine news worried investors, even though there was little sense of whether the bill would find popular support.

"This is one senator introducing what we would call a private members bill. It's far too early to say whether it will gain traction," BNP Paribas analyst Stephen Briggs said.

Many investors have been exposed to nickel through the options market, and the expiry of September options was also a factor in the surge in prices, analyst Leon Westgate at Standard Bank said.

"With options declaration rolling off, some of the recent gravitational pull of the $18,500 level has vanished," he said in a note.

Open interest in September call options was concentrated at the $18,500 strike. <0#MNIU4+>


In other metals, copper slid 0.9 percent to $6,908.25 a tonne, its lowest level in two weeks. Prices have struggled to gain headway in recent weeks as expectations of fresh supply have dampened investor interest.

Daily LME data showed stocks rose by 7,000 tonnes to 154,825 tonnes, their highest since July 22 after two weeks of near straight increases. <MCU-STOCKS>

"Copper took a hit when LME stocks (data) came out. If the surplus is going to become more visible through exchange stocks, that would be meaningful. It's too early to say," Briggs said.

Markets were wary of news about the Ukraine conflict.

Russian President Vladimir Putin said a deal to end fighting in eastern Ukraine could be reached this week, but hopes of peace were clouded by Western concerns that the announcement was timed by the Kremlin to wrong-foot NATO on the eve of a summit.

"This news about Russia and Ukraine, the immediate impact you're more likely to see through oil and precious metals for one, and secondly, it's not clear what it means," Briggs said.

Some investors hoped for further policy action at the European Central Bank meeting on Thursday after data showed euro zone retail sales slowed in July, while business activity grew at the slowest rate this year in August.

Looser policy in Europe would cheapen liquidity for industry and investors, who may raise their holdings of hard assets, which tend to hold their value when paper currency depreciates.

Aluminum shed 0.9 percent to $2,087 a tonne but was still within sight of last week's high above $2,100, which was the most expensive since February 2013.

A partial closure of capacity at an aluminum smelter in China helped drive up domestic prices of the metal by as much as 4 percent this week as investors scramble to compensate for an expected shortfall in supply.

Caroline Bain, senior commodities economist at consultancy Capital Economics, said its forecasts for aluminum had recently been revised.

"We are anticipating a small deficit of just over 100,000 tonnes this year, but we have the market back in surplus next year as we expect China's production to keep growing," she told the Reuters Global Base Metals Forum.


Three month LME copper

Most active ShFE copper

Three month LME aluminum

Most active ShFE aluminum

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, editing by David Evans and Jane Baird)