* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2 (Updates throughout, moves dateline from Melbourne)
LONDON, May 24 (Reuters) - Copper fell on Wednesday after Moody's downgraded China's credit ratings for the first time in 30 years, raising concerns over demand at the world's largest consumer of industrial metals, but a fall in copper stocks limited losses.
Stainless steel ingredient nickel also fell sharply as Chinese iron ore and steel futures tumbled and a rise in stocks pointed to ample supply.
Copper demand is however less dependent on Chinese stimulus measures than steel, said Julius Baer analyst Carsten Menke. "This is a sentiment-driven correction rather than a fundamentals-driven correction," he said.
LME COPPER: Copper on the London Metal Exchange was down 0.6 percent at $5,678 a tonne at 1051 GMT, having fallen to $5,635.50 earlier in the session. "Expect rallies into $5690-5710 to be sold first time around," brokers Marex Spectron said in a note.
COPPER STOCKS: Traders said prices were supported by a 18,825-tonne fall in on-warrant copper stocks available to the market at LME-registered warehouses. On-warrant stocks have declined by 28 percent to 176,225 tonnes from a high of 243,300 tonnes on May 4. <MCUSTX-TOTAL>
COPPER TECHNICALS: Technical support was around $5,635-$5,660. "It needs to close below the $5,620 area to look lower again," said a copper trader.
CHINA DOWNGRADE: Moody's said it expected the financial strength of China's economy to erode in the coming years as growth slows and debt continues to rise. Global markets were muted.
CHINA STEEL: Chinese steel futures fell and iron ore tumbled 7 percent following the downgrade and on concerns over ample supply.
U.S. PROPERTY: New U.S. single-family home sales tumbled from near a 9-1/2-year high in April, but the housing recovery likely remains intact amid a tightening labour market.
LME NICKEL: Lower Chinese steel and iron ore prices and a surge in Chinese nickel ore imports from the Philippines drove LME nickel down 2 percent to $9,165 a tonne.
NICKEL STOCKS: Traders said a 4,128-tonne rise in on-warrant nickel at LME-registered warehouses to 269,808 tonnes helped drive prices down by signalling good supply. <MNISTX-TOTAL>
NICKEL TECHNICALS: "Support at $9,150 is holding for now at least and has unearthed some short covering, rallies are to be sold today though," said Marex Spectron.
COMING UP: Fed releases minutes of May 2-3 meeting at 1800 GMT
PRICES: Lead was down 0.1 percent to $2,094.50 a tonne, while zinc was 0.5 percent lower at $2,645.50 and tin was down 0.8 percent at $20,330. Aluminium was 0.2 percent higher at $1,947.
(Additional reporting by Melanie Burton; Editing by Keith Weir)