London Metal Exchange nickel took center stage Wednesday rising nearly 5% driven by falling inventories, but analysts say they will keep a close watch on whether Asia succumbs to major bouts of profit-taking.

Three-month nickel reached a more than one-week-old high at $37,800 a metric ton Wednesday triggered by an increase in canceled warrants and falling stock levels, said Michael Skinner of Standard Bank in London.

Canceled warrants – or material accounted for and to be drawn down at a later date – soared to 54% Wednesday from Tuesday's 15%, leaving just 1,806 tons available to the market. This is less than half a day's worth of global nickel consumption.

An owner of metal in LME warehouses holds a warrant. Some traders suggest that nickel warrants are tightly held by one particular market participant. This player can move its metal on and off warrant in warehouses and have some control over nickel stocks – and prices – as a result.

Profit-taking at the top of the price ranges is to be expected, said Skinner, but "we haven't seen as much selling overnight in Asia" and will have to see whether this continues.

Meanwhile, three-month aluminium prices rose roughly 1% to a PM kerb of $2,828/ton on technical buying as political uncertainty in Guinea continued.

Guinea is a leading producer of bauxite, an essential component in producing aluminium.

Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.

However, an increase in aluminium stocks by 2,925 tons to 759,050 tons Wednesday capped gains. Aluminium inventories have climbed roughly 9% since the start of 2007.

In other metals, three-month copper traded down 0.5% to a PM kerb of $5,720/ton driven by a large increase in copper stocks by 1,650 tons Wednesday to 214,900 tons. Copper inventories have increased roughly 11% since the start of 2007.

Oil price weakness as well as easing strength in the euro added to copper price pressure.

Three-month zinc suddenly jumped in afternoon trade due to an erroneous trade by one participant, triggering stops and pushing prices sharply higher, according to one LME broker. Zinc rose roughly 2% to a PM kerb of $3,310/ton from Tuesday.

Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton before retreating modestly to a PM kerb of $12,695/ton.

"The main driver for prices continues to be uncertainty on the supply side stemming from Indonesia's Bangka island," said Kevin Norrish of Barclays Capital.

Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.

Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to gain greater control of the country's mineral wealth and refineries.