* Aluminium posts biggest one-day drop since 2010
* LME/ShFE arb: bit.ly/2wZSAEz
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices)
By Jan Harvey
LONDON, April 23 (Reuters) - Aluminium fell 7 percent on Monday, its biggest one-day drop in eight years, on news that the United States has extended the deadline for companies to wind down business with sanctions-hit Russian producer Rusal.
Americans engaged with Rusal now have until Oct. 23 to close out their business with the aluminium giant, the U.S. Treasury Department said on Monday in a statement extending the time period.
"That provides quite a big window for the market to seek alternative suppliers," said Ole Hansen, Saxo Bank's head of commodity strategy.
The metal rallied to its highest since mid-2011 last week at $2,718 a tonne on fears that the global market could face shortages as a result of the U.S. sanctions. It remains up more than 14 percent this month.
Rusal accounted for more than 6 percent of global aluminium output last year.
Nickel, which had hit a three-year high on April 19 on fears that sanctions could be extended, was also down more than 6 percent at its session low before closing down nearly 4 percent.
* LME ALUMINIUM: Three-month aluminium on the London Metal Exchange closed down 7 percent at $2,295 a tonne, its largest one-day fall since April 2010. Earlier, it hit a session low of $2,237, down more than 9 percent.
* FINANCIAL MARKETS: Gains in the dollar also weighed on base metals prices. The U.S. currency rallied to a seven-week high after a rise in the 10-year U.S. Treasury yield to within a whisker of the psychologically important 3 percent level prompted buying of the greenback.
* INVENTORIES: Aluminium stocks in LME-registered warehouses MALSTX-TOTAL fell by 10,525 tonnes to 1.385 million tonnes, exchange data showed on Monday. On-warrant inventories - those not earmarked for delivery - dropped by 4,100 tonnes to 935,650 tonnes, their lowest since February.
* RUSAL: Workers at one of Russia's biggest aluminium smelters say their Siberian town is doomed unless Moscow mitigates U.S. sanctions against Rusal. Washington blacklisted the company and its billionaire major shareholder Oleg Deripaska for suspected meddling in the 2016 U.S. election and other alleged "malign activity".
* COPPER: On-warrant copper inventories in LME-registered warehouses fell by 20,225 tonnes to 286,675 tonnes, their lowest in a month, the exchange data showed. Copper ended the day down 0.7 percent at $6,943 a tonne.
* NICKEL PRICES: LME nickel finished 3.8 percent lower at $14,265 a tonne, off a session low of $13,830.
* OTHER METALS: Zinc closed down 0.1 percent at $3,229 a tonne, while lead ended 1.9 percent lower at $2,320. Tin finished the day down 3.1 percent at $21,050 a tonne.
Reporting by Jan Harvey with additional reporting by Eric Onstad in London and Tom Daly in Beijing Editing by Mark Heinrich