(Add details about supply from Indonesia, context about recent Russia-related sanctions in paragraphs 5-8)

LONDON, April 19 (Reuters) - Nickel prices hit a seven-month high on Friday, driven by market talk of Chinese plans to buy the metal for state stockpiles and worries about tighter supplies from top exporter Indonesia.

Three-month nickel on the London Metal Exchange (LME) was up 3.7% at $19,250 a metric ton at y 1358 GMT. The metal, used in stainless steel and electric vehicle batteries, earlier hit $19,440, its highest since September.

Nickel was boosted by market talk that China's stockpiler, the National Food and Strategic Reserves Administration, was planning to buy nickel pig iron (NPI), the main feedstock for stainless steel, industry sources said.

One nickel industry source said he had heard China's stockpiler was seeking 200,000 tons of NPI. The source, who asked not to be named, said it was not known how much China would pay or which firms would provide the nickel.

However, two other industry sources said the number was significantly lower and put the amount the China was seeking at 20,000 tons of NPI. NPI contains about 10% of nickel on average.

The National Food and Strategic Reserves Administration did not immediately respond to a request for comment.

Meanwhile, Indonesia, the world's biggest nickel producer and major supplier to China, is still reviewing applications for mining quota approvals and is yet to issue the permits in full.

"Ore supplies are incredibly tight in Indonesia. That is again constricting production," the first source said.

On a weekly basis, nickel prices were heading for an 8% increase, their biggest weekly gain in ten months, due to upbeat sentiment towards base metals and supply concerns after Washington and London's decision to prohibit the LME and CME from accepting newly-made Russian nickel, aluminum and copper. (Reporting by Polina Devitt, Mai Nguyen, Beijing Newsroom, Pratima Desai and Eric Onstad; Editing by Barbara Lewis and Mark Potter)