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(Adds comment, updates prices) BEIJING, Aug 12 (Reuters) - London nickel prices plunged after an initial surge in volatile trade on Monday as bulls that placed bets on Indonesia bringing forward a ban on mineral ore exports moved to close their positions. The metal used to make stainless steel rose as much as 3.8% in early trade before giving up gains and shedding more than 3%. It had hit a 16-month high in London last Thursday before shedding 2.1% on Friday after Indonesia's trade minister, Enggartiasto Lukita, said Jakarta was discussing bringing forward the ban, which was previously set to come into force in 2022, but that no decision has been made. Initially, "funds went in and drove the price higher," said Xu Maili, director of nonferrous metals research at Everbright Futures in Shanghai. "Today, the bulls are closing their positions and the price is correcting," he added.
* LME NICKEL: Three-month nickel on the London Metal Exchange was down 3.1% at $15,065 a tonne as of 0351 GMT, below the 16-month high of $16,690 struck last Thursday.
* SHFE NICKEL The most-traded October nickel contract on the Shanghai Futures Exchange plunged as much as 5.9%, the biggest intraday drop since November 2017, to 118,510 yuan ($16,782.79) a tonne and stood at 119,260 yuan by the end of the morning session.
* VOLUMES: Trading volumes in the October ShFE nickel contract had reached 1.9 million lots by the end of the morning, almost double the 30-day average for a full day's trade.
* COLUMN: Indonesian supply fears stoke brutal LME nickel battle: Andy Home
* OTHER METALS: Lead was the biggest gainer in the LME complex, adding 1.7% to a two-week high of $2,101.50 a tonne, while copper edged up 0.1% to $5,763 a tonne and tin shed 1%. In Shanghai, zinc slipped 1.7% to 18,330 yuan a tonne, its lowest since January and tin fell 2.9%.
* COPPER: Peru suspended a recently issued construction permit for Southern Copper's Tia Maria mine, a project that has triggered violent protests by nearby residents.
* ARIZONA: Rio Tinto said it had moved a step closer to the development of a new copper project in Arizona, one of the few new major known deposits of the metal, with the potential to meet around a quarter of U.S. demand.
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* Asian shares fell, while gold prices held firm as investors worried a prolonged Sino-U.S. trade war could tip the world and U.S. economies into recession.
PRICES 0351 GMT
Three month LME copper 5763Most active ShFE copper 46640Three month LME aluminum 1784Most active ShFE aluminum 14015Three month LME zinc 2239.5Most active ShFE zinc 18425Three month LME lead 2097.5Most active ShFE lead 16940Three month LME nickel 15065Most active ShFE nickel 119220Three month LME tin 16730Most active ShFE tin 133000
($1 = 7.0614 Chinese yuan renminbi)
(Reporting by Tom Daly; editing by Richard Pullin and Uttaresh.V)