* LME/ShFE arb: http://bit.ly/2wZSAEz (Recasts, updates with closing prices)
LONDON, Feb 14 (Reuters) - Industrial metals prices rose on Wednesday, with nickel hitting its highest in two and a half years as a weaker dollar made metals cheaper for holders of other currencies.
Stronger than expected inflation in the United States spurred buying of equities and hard assets including metals, which protect against value erosion, said Societe Generale analyst Robin Bhar.
"Risk-on sentiment has clearly come back into vogue and commodities are clearly risk-on," he said.
Rising prices had triggered pre-set buying orders, helping to drive prices higher, Sucden trader Liz Grant said in a note.
NICKEL: Benchmark nickel on the London Metal Exchange closed up 4.8 percent at $14,100 a tonne after touching $14,135, its highest since May 2015.
OUTLOOK: Nickel last month broke free of a long-term downtrend since 2011 peaks. A combination of surging China imports, tighter supply and fund interest are expected to sustain prices of the stainless steel ingredient.
CHINA HOLIDAY: The Shanghai Futures Exchange is closed from the evening session on Wednesday until Feb. 22, reducing trading activity and increasing price volatility.
YUAN: Economists polled by Reuters said that the Chinese yuan would erase most of its substantial gains against the dollar since the start of the year, reducing the buying power of Chinese investors.
ALUMINIUM: Benchmark aluminium ended with a 1.8 percent gain at $2,177.50 a tonne, breaking above its technically important 50-day and 100-day moving averages.
STOCKS: Aluminium had earlier fallen to $2,112.50, its lowest since Dec. 20, after a jump in inventories at LME-registered warehouses, climbing by more than 200,000 tonnes from late last week to nearly 1.3 million tonnes. Inventories in Shanghai Futures Exchange warehouses also continued to rise, hitting record levels. <MALSTX-TOTAL> <AL-STX-SGH>
SUPPLY: "There is obviously ample supply of aluminium in China and therefore scope to export at least some of that material," said Commerzbank analyst Daniel Briesemann, predicting that prices could fall below $2,000 a tonne.
HIDDEN STOCKS: The rise in stockpiles was also a reminder that about 7 million tonnes of aluminium sits outside the exchange warehouse system after market surpluses in recent years, said Julius Baer analyst Carsten Menke.
GERMANY: Expectations of robust demand for metals were bolstered by data showing robust growth in Germany, Europe's biggest economy.
COPPER: LME copper rose 2.5 percent to close at $7,163 a tonne, its highest in a week and near the four-year high of $7,312.50 struck last month.
OTHER METALS: Zinc ended 2.8 percent up at $3,567.50, lead finished with a 0.7 percent gain at $2,579 and tin closed 0.2 percent higher at $21,550.
(Additional reporting by Tom Daly; Editing by Keith Weir and David Goodman)