LONDON- Aluminium prices were on track to register their biggest quarterly gain since 1988 on Thursday, driven up by supply disruptions and increased production costs resulting from Russia's invasion of Ukraine.

Nickel, meanwhile, headed towards its largest quarterly rise since 2003, helped by a short squeeze on the London Metal Exchange (LME) that caused a price spike this month.

Russia produces about 6% of the world's aluminium and 10% of its nickel, along with other metals, energy and grains.

Sanctions against Russia have cut or complicated supply routes and driven up the price of energy used to power smelters. High costs had already forced some aluminium and zinc smelters in Europe to reduce output.

Benchmark aluminium on the LME was down 0.1% at $3,546 a tonne by 1050 GMT on Thursday but up 26% this quarter.

LME nickel was up 0.6% at $33,080 and 58% higher over the quarter.

Both metals reached record highs in March, though nickel's was later cancelled by the LME as it sought to stabilise the market after a savage price spike on March 8.

Metals prices are likely to rise further as inflation pushes investors towards commodities while tight supply of industrial metals and the risk of further sanctions constraining Russian supply also boosting prices, said ING analyst Wenyu Yao.

"Upside risk will dominate in the next few months," she said.

Among threats to demand are measures to contain the spread of COVID-19 in China, the biggest metals consumer. Chinese factory activity contracted in March, but the government says it will prop up economic growth.

LME copper was down 0.1% at $10,358 a tonne on Thursday but up about 6% in the first quarter. Prices reached a record high in March.

Zinc was down 0.3% at $4,136 but up about 17% for the quarter after also hitting a record peak in March.

Lead rose 0.3% to $2,425.50 and has gained about 5% in the first three months of 2022.

Tin was up 0.5% at $42,720 and up 10% in the first quarter, having reached a record high in March to help it towards an eighth consecutive quarterly gain.

(Reporting by Peter Hobson Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)