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METALS-Copper steady after hitting two-year peak

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2 (Recasts, adds details/quote, updates prices, changes dateline)

LONDON, Aug 7 (Reuters) - Copper steadied after hitting a two-year peak on Monday, helped by a weaker dollar and after a rally in Chinese steel and iron ore prices brightened the outlook for growth and industrial demand in the world's largest metals consumer.

Chinese rebar steel futures surged as much as 7 percent to their highest in more than four years on expectations of reduced supply in the winter due to Beijing-imposed capacity curbs.

"It's a combination of (positive) sentiment around China that coincides with a realisation that the copper market balance has been on a knife edge for the last year. Disruptions on the supply side have left limited room for error," said Paul Gait, an analyst at Bernstein.

"Admittedly steel and iron ore price gains are more to do with capacity curtailment but its capacity curtailment in the context of China looking to ensure a healthy price for its industrial commodities. We have a pro growth, pro inflation policy in Beijing and that has implications for copper."

FUNDAMENTALS

* COPPER PRICE: London Metal Exchange copper was down 0.1 percent at $6,363.50 a tonne by 1003 GMT, having earlier jumped to $6,430.50, its highest since May 2015. Volumes were more than double usual levels at more than 9,000 lots.

* WIDER MARKETS: The dollar edged lower, making dollar priced metals cheaper for non-U.S. investors, while world stocks breached new records on better-than-expected company earnings and strong jobs data in the U.S.

* CHINA CAPACITY CUTS: China earlier this year ordered steel and aluminium producers in 28 cities to slash output during winter as it fights smog. Last week, the key steel producing area of Tangshan and other parts of Hebei province said they will implement the order.

* ALUMINIUM PRICE: Aluminium rose 0.9 percent to $1,927.50 a tonne, while in Shanghai, prices rallied more than 3 percent to their highest since January 2013 on prospects for supply shutdowns in top producer China.

* NICKEL PRICES: Stainless steelmaking ingredient nickel rallied 1.1 percent to $10,360, chasing surging steel prices in China, though gains were capped by still high levels of inventory <MNISTX-TOTAL>.

* COPPER SPECS: Hedge funds and money managers boosted their net long position in COMEX copper to a record high in the week to Aug. 1, U.S. Commodity Futures Trading Commission data showed on Friday.

* TIN EXPORTS: Indonesia, the world's largest tin exporter, shipped out 6,205.87 tonnes of refined tin in July, data showed, a jump of 87 percent from the same month a year earlier.

(Additional reporting by Melanie Burton, editing by David Evans)