* LME/ShFE arb: bit.ly/2wZSAEz (Adds closing prices)
By Maytaal Angel
LONDON, April 19 (Reuters) - Nickel and aluminium retreated on Thursday in volatile trade after soaring to multi-year highs on fears over the impact of U.S. sanctions on Russian companies, with analysts saying the gains were overdone, especially in nickel.
The U.S. targets include Rusal, the world's No. 2 aluminium producer, and traders fear the sanctions could be broadened to Nornickel, the world's second-largest nickel producer.
Nornickel is linked with both Rusal and sanctioned Russian oligarch Oleg Deripaska.
Three-month nickel on the London Metal Exchange rose 9.3 percent to a three-year high of $16,690 a tonne before retreating to end 1.3 percent down at $15,075. It has risen nearly a third since sanctions were imposed on Rusal on April 6.
Aluminium hit its highest in almost seven years at $2,718 a tonne before closing 2.1 percent down at $2,485. It has risen nearly 40 percent since the Rusal sanctions were imposed.
"The U.S. can't afford to (impose sanctions on) Nornickel because they are so heavily reliant on (its) palladium. The question is how the situation will evolve if tensions tighten between Russia and the U.S., that's what the market is currently playing," said Julius Baer analyst Carsten Menke.
"If any commodity moves more than 10 percent in two days its either a severe disruption to supplies, which we don't have in (nickel's) case, or its speculators. The rally is absolutely overdone."
Menke noted the situation in aluminium was different, given supply chains need to be reorganised to account for an actual disruption. "That takes time and against that backdrop higher prices are justified (in the short term)," he said.
Russian news agencies reported on Wednesday that the U.S. administration had informed the Russian embassy in Washington that it had no immediate plans to impose further sanctions.
NATIONALISATION: A temporary nationalisation of Rusal is one of the options for helping the company, a Kremlin spokesman said on Thursday.
RUSAL STOCKPILING: Rusal is stockpiling large quantities of aluminium at one of its plants in Siberia because U.S. sanctions have prevented it from selling the metal to customers.
CHINA ALUMINA: Chinese traders are preparing to export alumina to reap the profits from record prices for spot cargoes after the United States imposed the Rusal sanctions.
METAL SCRAMBLE: U.S. customers of Rusal are scrambling to figure out how to replace aluminium supply from the Russian company.
RUSAL LENDERS: bANKS are exploring how to get rid of their exposure to Rusal before a May deadline set by the United States.
SHANGHAI NICKEL TRADING FEES: China's Shanghai Futures Exchange will adjust its intraday transaction fee for July nickel futures after they rose 4.3 percent on Thursday.
OTHER METALS: Copper ended 0.5 percent down at $6,984 a tonne, zinc fell 1.3 percent to $3,223, lead ended 1.7 percent down at $2,337 and tin finished down 0.1 percent at $21,450.
Additional reporting by Manolo Serapio Jr. Editing by Adrian Croft and David Goodman