* LME/ShFE arb: http://bit.ly/2wZSAEz (Adds analyst comments, updates prices, changes dateline from MELBOURNE)
LONDON, Dec 4 (Reuters) - Nickel gained on Monday as the metal mainly used in stainless steel got a boost after Chinese steel futures touched three-month highs.
Steel and iron ore contracts in Shanghai surged on Monday as government-ordered steel production cutbacks to reduce pollution led to tighter supplies for some mill products.
The stronger prices might not last long, however, because eventually the steel production cutbacks during the peak Chinese smog season in the winter would mean less need for nickel, said Caroline Bain, chief commodities economist at Capital Economics.
Benchmark nickel on the London Metal Exchange climbed 1.4 percent to $11,445 a tonne by 1110 GMT, building on gains of 1.6 percent on Friday.
Capital Economics expects nickel - which has declined 12 percent from a two-year peak of $13,030 hit on Nov. 1 - to end this year at $10,750.
Other metals are also likely to see a modest amount of further downside, Bain added.
"There's quite a lot of speculation in the market and we think there's over-optimism about the strength of Chinese demand," she said.
"I think there are clear signs now that the economy is cooling, particularly in the metals-intensive industries."
* DOLLAR: Weighing on the wider metals complex was a rebound in the dollar after the U.S. Senate approved a tax overhaul at the weekend. A firmer dollar makes commodities priced in the greenback more expensive to buyers using other currencies.
* COPPER: LME three month copper dipped 0.1 percent to $6,826.50 a tonne.
"Whilst China property concerns remain, steady global growth expectations coupled with on-going mine supply disruptions are likely to lend support on dips with $6,550-$6,650 the bottom of a new range," said Alastair Munro at broker Marex Spectron.
* INVESTORS: Hedge funds and money managers raised their net long positions in COMEX copper contracts in the week to Nov. 28, data showed on Friday.
* CHINA: China's economic growth target for 2018 will reflect new changes in the economy as the government puts more emphasis on higher quality development, the State Council Information Office said on Monday.
Policy sources have told Reuters that China's leaders are likely to maintain this year's growth target of "around 6.5 percent" in 2018.
* CHINA: Global miner Rio Tinto pointed to a possible slowing in China over the next six months, with a weakening in construction, infrastructure and automotive demand growth, but said it remains optimistic about China in the medium to long term.
* ALUMINIUM: LME aluminium edged up 0.2 percent to $2,078 a tonne, supported by reports that China's central Shanxi province has introduced new rules curbing water use for steel, cement and aluminium production.
* COMING UP: U.S. Factory orders Oct at 1500 GMT
(Reporting by Eric Onstad; Editing by Gareth Jones)