METALS--Nickel dips on profit taking after touching six-week peak

(Adds analyst comment, updates prices, changes dateline from BEIJING)

LONDON, June 1 (Reuters) - Nickel eased on Friday from a six-week peak, as investors took profits after a rally driven by production cuts in China, falling inventories and higher steel prices.

Benchmark nickel on the London Metal Exchange, which has gained 12 percent over the past month, was down 0.2 percent at $15,190 a tonne by 1020 GMT after touching $15,690, the highest since April 19.

Open interest in LME nickel was at its highest since January 2015.

"You've seen a huge rally, particularly on the Shanghai side. What's really important is to keep an eye on profit taking," said Oliver Nugent, commodities strategist at ING Bank in Amsterdam.

"Even though the bulls are chasing it now, we think there's got to be a demand hit from the stainless steel side of things."

High grade nickel traded on the LME is now about $1,000 per tonne more expensive than nickel pig iron, an iron-rich feed for stainless steel plants, which will drive switching to the cheaper material, Nugent added.

The bulk of nickel is used to make stainless steel.

In the near term, however, nickel got a boost when an official at Shandong Xinhai Technology Co confirmed on Friday the company had been told to reduce output of nickel pig iron.

* SHFE NICKEL: The most-traded nickel contract on the Shanghai Futures Exchange, for July delivery, rose as much as 5.5 percent to 120,000 yuan ($18,701.78) a tonne, a fresh three-year high, and closed up 2.1 percent. The contract notched a weekly gain of 6.2 percent, its biggest since the week ended Jan. 26.

* REBAR: Nickel was also bolstered as Shanghai steel rebar prices rose to their highest in nearly three months on Friday.

* CHINA DATA: Metals got support from a private survey that showed China's manufacturing sector expanded at a steady pace in May as a pick up in production and domestic business offset a second month of declines in new export orders.

* ALUMINIUM: Canada and Mexico retaliated against the United States' decision on Thursday to impose tariffs on steel and aluminium imports and the European Union had its own reprisals ready to go.

* ALUMINIUM: The news on tariffs failed to boost LME aluminium, which fell 0.5 percent to $2,281.50 a tonne, partly because the market expects a deal will be concluded with big aluminium exporter Canada, analysts said.

* COPPER: LME copper edged up 0.1 percent to $6,859 a tonne. The price appears to be consolidating head of the June options expiry next Wednesday "where a lot of upside open interest is to roll off", said Alastair Munro at broker Marex Spectron.

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(Additional reporting by Tom Daly in Beijing Editing by Susan Fenton)