* Nickel has gained more than 30 pct this year * China factory activity shrinks for fourth month in Apr * Coming up: U.S. Markit manufacturing flash PMI at 1345 GMT (Updates prices, adds comments, detail; previous SINGAPORE) By Harpreet Bhal LONDON, April 23 (Reuters) - Nickel rose to its highest level in more than 14 months on Wednesday as tighter supplies continued to fuel the metal's rally, while copper slipped after data showed a contraction in factory activity in top consumer China. The impact of Indonesia's ban on exports of unprocessed minerals was felt sharply last month when the country's shipments of nickel ore to top buyer China fell to less than a million tonnes from an average of 3.4 million tonnes a month last year. Also boosting nickel was the risk that the Ukraine crisis may disrupt supplies from Russia, the world's second-largest nickel producer, if Western powers impose further economic sanctions on Moscow. U.S. State Department Secretary John Kerry told Russian Foreign Minister Sergei Lavrov in a phone call that Washington would impose more sanctions on Russia if tensions did not de-escalate in eastern Ukraine, a U.S. official said. Three-month nickel on the London Metal Exchange hit a session high of $18,525 a tonne, its highest level since early February last year. At 0904 GMT it was up 0.9 percent at $18,489 a tonne, having risen more than 2 percent in the previous session. Nickel prices have gained more than 30 percent so far this year, outperforming other base metals. "The fundamentals have lined up well for nickel. Apart from the concerns about supply from Indonesia, there are renewed tensions in Ukraine and nickel is one of the more sensitive metals to the situation there," said Vicky Sanders, head of analytics sales at Marex Spectron. Marex Spectron estimates that nickel has the largest long position within the LME base metals complex, with the metal's speculative long position rising to 44 percent of open interest, the highest level since April 2010. "There are many speculators in the nickel market pushing prices higher to get profit and prices are rising even faster than real demand," said a Chinese trader. The Indonesian ban took effect in January, but arrivals of nickel ore into China only dropped steeply in March. In January, China's nickel ore imports from Indonesia, the world's biggest supplier, stood at more than 6 million tonnes before falling by half in February. China uses laterite nickel ore to produce nickel pig iron, which is used to make stainless steel. A shortage in nickel ore may curb supply of nickel pig iron which means mills may be forced to increase its use of higher-grade refined metal. "There are still around more than 20 million tonnes of nickel ore, but they are mostly held by big producers which can keep producing until September," said Peter Peng, analyst at CRU Group in Beijing. "But some small nickel pig iron producers in northern China have been short of laterite ore since the middle of last month. We do see a 15 percent drop in China's nickel pig iron production this year," Peng added. In other metals, copper prices slipped 0.3 percent to $6,647 a tonne, dragged lower by uncertainty about the outlook for demand as China's economy slows. China's factory activity shrank for the fourth straight month in April, signalling economic weakness into the second quarter, a preliminary survey showed on Wednesday, although the pace of decline eased, helped by policy steps to arrest the slowdown. China is the world's largest copper consumer, accounting for around 40 percent of global refined demand. "We believe economic activities (in China) are improving at the margin in 2Q 2014 but the pace will likely be modest," Credit Suisse analysts said in a note. "We also don't expect the government to introduce meaningful stimulus policies to boost growth."

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