(Recasts, adds Nornickel official's comments, updates prices) By Manolo Serapio Jr MANILA, April 19 (Reuters) - Nickel surged more than 9 percent on Thursday to its strongest level since late 2014 on fears U.S. sanctions on major Russian aluminium producer Rusal may be broadened and could hit key Russian nickel supplier Nornickel. It was the second straight session of sharp gains for nickel, adding to Wednesday's 7.5-percent spike, spurred by worries over tighter global supply for a commodity already in deficit. Three-month nickel on the London Metal Exchange rallied as much as 9.3 percent to $16,690 a tonne, the highest since December, 2014. The metal, used to make stainless steel, was up 7.3 percent at $16,395 by 0702 GMT. "Pretty clearly there is a lot of smoke. And pretty clearly the U.S. has Russia in its sights for a number of reasons known to them," said UBS analyst Lachlan Shaw. "A logical extension would be if you were to broaden sanctions, then Norilsk would fall under that remit." Russia's Norilsk Nickel, or Nornickel, is the world's second-biggest nickel producer. An official for Nornickel this week dismissed the idea of the prospect of sanctions on the company driving up the nickel price. "I think it's just normal fluctuation in the market. If you look at it broadly, the financial play in commodities has increased a lot," Anton Berlin, marketing director at Nornickel told Reuters on the sidelines of an industry conference in Shanghai. U.S. President Donald Trump has delayed imposing additional sanctions on Russia and is unlikely to approve them unless Moscow carries out a new cyber attack or some other provocation, a senior administration official said on Monday. "Unlike aluminium, which saw explicit sanctions against Rusal, there have been no explicit sanctions against nickel producers," Commonwealth Bank of Australia analyst Vivek Dhar said in a note. "However, markets are still concerned Norilsk Nickel, which is linked with both Rusal and sanctioned oligarch Oleg Deripaska, could eventually face sanctions." LME aluminium sustained a weeks-long rally on Thursday, hitting its highest level in almost seven years. The metal climbed as far as $2,664.50 a tonne, its loftiest since August 2011, and was last up 3.5 percent at $2,627. Aluminium has risen by nearly a third since the United States announced sanctions against UC Rusal, the world's No. 2 aluminium producer, on April 6. Nickel has gained almost a quarter this month. SHANGHAI NICKEL: The most-traded nickel on the Shanghai Futures Exchange rose as much as 5.9 percent to 109,790 yuan ($17,514) a tonne, its strongest level since June, 2015, before closing at 108,120 yuan, up 4.2 percent. SHANGHAI METALS: Aluminium and zinc prices in Shanghai also raced higher. Shanghai aluminium rose 3.4 percent to 15,380 yuan per tonne and zinc climbed 2.9 percent to 24,530 yuan. NICKEL DEFICIT: The global nickel market deficit narrowed to 2,500 tonnes in February from a revised deficit of 15,800 tonnes in the previous month, the International Nickel Study Group said. CHINA BAN: China will ban the import of 16 more scrap metal and chemical waste products from the end of this year, the environment ministry said. The 16 banned products include steel smelting slag containing more than 25 percent of the metal manganese, and ethylene polymer waste. BHP IRON ORE: BHP Billiton Ltd cut its 2018 fiscal year iron ore output guidance, citing issues in its railroad car unloading system, after reporting an 8 percent rise in third-quarter iron ore production. U.S. ALUMINIUM: Aluminium prices in the United States have soared and are expected to diverge from those traded on the LME after the U.S. Treasury Department imposed sanctions on Rusal. BASE METALS PRICES 0702 GMT Three month LME copper 7052.5 Most active ShFE copper 51940 Three month LME aluminium 2627 Most active ShFE aluminium 15380 Three month LME zinc 3271.5 Most active ShFE zinc 24525 Three month LME lead 2387 Most active ShFE lead 18345 Three month LME nickel 16395 Most active ShFE nickel 108120 Three month LME tin 21635 Most active ShFE tin 145750 BASE METALS ARBITRAGE LME/SHFE COPPER LMESHFCUc3 366.03 LME/SHFE ALUMINIUM LMESHFALc3 -3757.14 LME/SHFE ZINC LMESHFZNc3 137.99 LME/SHFE LEAD LMESHFPBc3 98.87 LME/SHFE NICKEL LMESHFNIc3 -13414.08 ($1 = 6.2687 Chinese yuan) (Reporting by Manolo Serapio Jr. Additional reporting by Melanie Burton in Melbourne and Tom Daly in Shanghai Editing by Gopakumar Warrier and Joseph Radford)