METALS-Copper hits three-year high on solid China outlook

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm20 (Updates throughout, moves dateline from Melbourne)

LONDON, Sept 4 (Reuters) - Copper prices rose on Monday to their highest level in three years and nickel touched a two-year high as strong Chinese economic growth boosted the outlook for demand from the world's largest metals' consumer.

Industrial metals mostly rose despite a nuclear test by North Korea that pushed down global stocks and boosted safe havens assets. 1/2MKTS/GLOB 3/8

"Copper continues to enjoy the tailwind from the outlook in China," said Saxo Bank analyst Ole Hansen.

A recent strengthening of the Chinese yuan against the dollar was also helping metals to rally, said Hansen. A stronger yuan makes dollar-priced metals cheaper for Chinese investors.

LME COPPER: Benchmark copper on the London Metal Exchange was up 1.1 percent at $6,909 a tonne at 1026 GMT after touching $6,920.25, the highest since September 2014.

SPECULATORS: Prices have been supported by a surge in speculative momentum buying, with hedge funds and money managers raising their net long position in copper to a fresh record last week.

OVERBOUGHT: "We regard the copper price and indeed the other metals prices as overbought," said analysts at Commerzbank. "Prices have become largely detached from the fundamental data ... the potential for and possible extent of a price correction are increasing every week."

TECHNICALS: Fibonacci resistance kicks in at around $7,200 a tonne, when prices will have recouped half of the losses suffered during a 2011-2016 downtrend, said Hansen.

STOCKS: Headline stocks in LME-registered warehouses fell by 2,625 tonnes to 223,500 tonnes, near their lowest since early March, supporting prices. <MCUSTX-TOTAL>

CHINA: China saw solid growth in the first half and data last week showed China's manufacturing sector unexpectedly accelerated in August, suggesting the world's second-largest economy is still expanding at a healthy clip despite rising financing costs and a cooling housing market.

MANUFACTURING: Factories across Asia and Europe cranked up production last month as global demand remained strong, confounding expectations growth may have peaked.

CHINA STEEL: Chinese rebar futures rose as much as 5 percent on Monday to the highest since February 2013.

NICKEL: The rally in Chinese steel pushed steel ingredient nickel to a peak of $12,380, its highest since June 2015. It was last up 1.5 percent at $12,220 a tonne.

ALUMINIUM PREMIUM: A global aluminium producer has offered Japanese buyers a premium of $100 per tonne for primary metal shipments during the October to December period, down 15 percent to 16 percent from the current quarter.

PRICES: LME aluminium was down 0.5 percent at $2,125.50 a tonne; zinc was 0.4 percent higher at $3,196.50; lead was down 0.1 percent at $2,392; and tin had gained 0.5 percent to $20,735.

(Additional reporting by Melanie Burton; Editing by Susan Fenton)