Aluminum and nickel hovered near multi-year highs on Wednesday as Western nations sought to step up sanctions pressure on major metals producer Russia.

The United States, the European Union and Britain have targeted Russian banks and elites over Moscow's deployment of troops in separatist regions of eastern Ukraine, in one of the worst security crises in Europe in decades.

Russia produces around 6% of the world's aluminum and 7% of its mined nickel.

"As with aluminum, the nickel price is being boosted by concerns that the supply of nickel from Russia could also be hampered in the event of possible sanctions and retaliatory measures," said Commerzbank analyst Daniel Briesemann.

The market for nickel, used in stainless steel and lithium ion batteries, was already undersupplied, with demand buoyant and supply dwindling, Briesemann said.

Benchmark aluminum on the London Metal Exchange (LME) eased 0.4% to $3,290 per tonne in official trading, close to a 2008 record of $3,380.15.

Three-month nickel was steady at $24,600 a tonne, after climbing above $25,000 for the first time since 2011 in the previous session.

RIO TINTO: Possible U.S. sanctions on Moscow over the Ukraine crisis may affect Russia's aluminum industry, Rio Tinto Chief Executive Officer Jakob Stausholm said.

TIGHT SUPPLIES: Analysts at WisdomTree pointed out that supply tightness continued to support industrial metals prices, with backwardated futures curves suggesting that markets were pricing in supply tightness in the coming years.

SPREADS: The premium for cash nickel over the three-month contract soared to its highest since 2007 at $645 a tonne, as inventories in LME-registered warehouses slid to a more than two-year low of 82,314 tonnes.

In aluminum, the LME cash contract commanded a $40 a tonne premium over the three-month contract, pointing to worries over supply.

OTHER METALS: LME copper rose 0.5% to $9,965 a tonne, zinc was steady at $3,604, lead was also barely changed at $2,342, while tin was up 0.2% to $44,450.