LONDON, Nov 23 (Reuters) - Commodity trader Trafigura is planning to take large amounts of lead from London Metal Exchange approved (LME) warehouses, two sources with knowledge of the matter said, with a metals trader adding that the move was behind a short-lived price rally earlier in the week.

Benchmark lead prices on the LME touched a 10-month high of $2,308.50 a metric ton on Monday when LME data showed cancelled warrants - metal earmarked to leave the LME system - had jumped to 44% of the total or 59,400 tons on Nov. 17.

Cancelled warrants of battery material lead stood at less than 1% on Nov. 14. Latest data for Nov. 22 shows the largest cancellation is 33,050 tons in LME warehouses in Kaohsiung, Taiwan, followed by 16,800 tons in Busan, South Korea.

It is not known exactly how much lead Trafigura has cancelled, but the amounts are substantial, the sources said.

Trafigura declined to comment.

Lead prices have since retreated to around $2,220 a ton due to some expectations the cancelled metal may not ultimately leave LME warrant - a title document that confers ownership - or if it does, that it could eventually be rewarranted.

"The price spike has to be related to the cancellations, though it doesn't seem as if anything is moving," the metals trader said. "It is nothing to do with fundamentals."

LME lead stocks climbed in September and October due to a high premium for the cash over the three-month contract , which rose above $60 a ton on Sept. 5, the highest since late June. The cash contract is now trading at a $10 discount to the three-month contract.

At 136,525 tons, lead stocks in LME warehouses are up more than 150% since the middle of September and are expected to rise further as the market moves into surplus.

"CRU sees the global refined lead market moving deeper into surplus next year, having switched from a notable deficit in 2022 to modest surplus in 2023," said CRU analyst Neil Hawkes.

(Reporting by Pratima Desai; editing by Kirsten Donovan)