* LME aluminium stocks at lowest since last May
* Rusal sanctions relief widely expected, priced in
* Aluminium mkt in deficit, demand set to improve (Adds closing prices, details)
By Maytaal Angel
LONDON, Jan 29 (Reuters) - Aluminium prices rose on Tuesday as investors saw the previous session's 2.8 percent drop as overdone given falling stockpiles and efforts by top consumer China to stimulate growth.
The United States said on Monday it would lift sanctions on aluminium Russian producer Rusal, while the London Metal Exchange (LME) said it would resume accepting all Rusal metal into its warehouses.
While the move means unsold Rusal material could hit the market, balances are tightening overall, as reflected by falling stocks. Investors are also counting on more stimulus from China after the Chinese New Year break in February.
Aluminium stocks in LME approved warehouses stand at 1.3 million, near their lowest since May 2018, while stocks in Shanghai Futures Exchange (ShFE) warehouses are at 690,000 tonnes, down 30 percent since last May.
Oliver Nugent, commodity strategist at Citi, said China had cut three million tonnes of aluminium capacity last year and stocks were now being drawn, adding that demand would likely improve after the Chinese new year thanks to stimulus measures from Beijing.
* LME ALUMINIUM: Three-month LME aluminium ended up 1.5 percent at $1,894 a tonne, bringing gains for the year to around 2.5 percent. Aluminium ended 2018 down 18.6 percent on bets the Rusal sanctions would be lifted and on U.S.-China trade tensions.
* OPEN INTEREST: Indicating potential short covering ahead, aluminium exhibits the largest short in the base metals complex, equivalent to 22 percent of open interest, according to broker Marex Spectron.
* CHINA-GROWTH: China on Tuesday unveiled measures aimed at spurring sales of items ranging from cars and appliances to information services, as the world's second-largest economy grows at its slowest pace in nearly 30 years.
* ALUMINIUM DEFICIT: "We remain of the view that, with the market in heavy deficit and demand set to improve, the skew of price risk into mid-year is to the upside," BMO Capital Markets said in a note.
* U.S.-CHINA: The United States on Monday announced criminal charges against Chinese telecoms giant Huawei, escalating tensions with Beijing just days before trade talks between the two countries.
* CHINA-POLL: Activity in China's vast manufacturing sector likely shrank for the second straight month in January.
* POLAND COPPER: Nine miners are missing after an earth tremor struck KGHM Polska Miedz's mine near the Polish town of Rudna.
* OTHER METALS: Copper ended up 0.8 percent at $6,050 a tonne, zinc ended down 0.9 percent at $2,656, lead closed down 0.1 percent at $2,075, tin closed up 0.1 percent at $20,675 while nickel closed up 2.5 percent at $12,120, having hit its highest since last October.
Additional reporting by Tom Daly; editing by Emelia Sithole-Matarise/Louise Heavens/Alexander Smith