NICKEL has closed considerably higher on the London Metal Exchange (LME), extending a strong price surge on the back of global supply concerns.

"Commodities are generally higher this Monday as geo-political tensions related to east Ukraine have provided a lift," noted Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Precious metal prices had also taken strength from the heightened geo-political risks.

At the close of open-outcry trading in the London ring, LME 3-month nickel was up 2.2 per cent from Friday's closing price at $US17,790 per metric ton.

LME copper stagnated, closing flat at $US6,665 per ton, while aluminium fell 0.1 per cent to $US1,882 per ton.

Year-to-date, nickel prices are up some 25 per cent.

The metal's rally has been driven by factors including a ban on exports of unprocessed ore by Indonesia, leading to weaker shipments, and tensions over Ukraine.

Indonesia is one of the biggest producers of high-quality ore and Russia's OAO Norilsk Nickel Metal and Metallurgical Co is the world's largest producer of the metal. Russia last year accounted for 12 per cent of the global nickel supply.

A day after threatening a full-scale military operation to drive pro-Russian militants out of a string of eastern Ukrainian cities, the country's acting president offered an apparent olive branch on Monday, saying he wasn't opposed to a countrywide referendum on possibly granting regions greater autonomy.