METALS-Weaker dollar drives copper higher despite surging inventories

* LME/ShFE arb: http://bit.ly/2wZSAEz (Updates prices)

LONDON, Jan 24 (Reuters) - A sharply weaker dollar helped copper to rebound on Wednesday from a one-month low despite a second day of rapidly rising inventories that suggested there is plentiful supply of the metal used in power and construction.

Nickel, meanwhile, pushed through a key technical level to reach a 2-1/2 year peak, with lead and zinc also advancing to multi-year highs.

Concern over U.S. protectionism and comments by the U.S. Treasury Secretary welcoming a weak dollar drove the greenback to a three-year low against major currencies.

A weaker dollar makes metals cheaper for holders of other currencies and can stimulate demand.

"The main story of the day has to be the weakness we are seeing in the dollar," said INTL FCStone analyst Edward Meir.

COPPER: Benchmark copper on the London Metal Exchange was up 2.4 percent at $7,095 a tonne at 1559 GMT after plunging by 2.1 percent on Tuesday to $6,885, its lowest since Dec. 19.

STOCKS: On-warrant copper stocks available to the market in LME-registered warehouses jumped by 24,325 tonnes after a rise of 44,825 tonnes on Tuesday, taking the increase in on-warrant inventories since Jan. 17 to 51 percent. <MCUSTX-TOTAL>

NO SURPRISE: Traders said that after Tuesday's big rise further inflows had been expected. "We see big stock increases all the time at various points. The market has been talking about it for a couple of weeks (and) because of this doesn't see it as an issue," one trader said.

TECHNICALS: Copper rose back above its technically important 50-day moving average at about $6,944. "We need copper back above $7,075 for a turn in the downward trend," a trader said.

CHINA: The rise in LME stocks could reflect weaker import demand from China, analyst Helen Lau wrote in a note. China imported 450,000 tonnes of unwrought copper in December, down 6.9 percent year on year, while its refined copper output hit a record high of 865,000 tonnes.

GLOBAL GROWTH: The global economy is expected to grow at a robust pace this year, a Reuters poll showed, bolstering expectations of solid demand for metals.

NICKEL: Nickel broke above a long-term downtrend line from its 2011 high, triggering technical buying. Expectations of increased demand for nickel in batteries used to power electric vehicles has driven the stainless steel ingredient to 2-1/2 year highs. It was up 3.3 percent at $13,285 a tonne on the LME.

ZINC AND LEAD: Zinc was 0.8 percent higher at $3,440 after hitting $3,453, the highest since August 2007, while sister metal lead gained 1.1 percent to $2,638 after touching $2,642.50, its highest since August 2011. The prices of both metals have been boosted by supply deficits.

OTHER METALS: Aluminium was flat at $2,229 a tonne and tin rose 1.3 percent to $20,980.

(Additional reporting by Tom Daly; Editing by David Goodman)