In the present work we investigate the adequacy of broken-symmetry unrestricted density functional theory for constructing the potential energy curve of nickel dimer and nickel hydride, as a model for larger bare and hydrogenated nickel cluster calculations. We use three hybrid functionals: the popular B3LYP, Becke's newest optimized functional Becke98, and the simple FSLYP functional (50% Hartree-Fock and 50% Slater exchange and LYP gradient-corrected correlation functional) with two basis sets: all-electron (AE) Wachters+f basis set and Stuttgart RSC effective core potential (ECP) and basis set. We find that, overall, the best agreement with experiment, comparable to that of the high-level CASPT2, is obtained with B3LYP/AE, closely followed by Becke98/AE and Becke98/ECP. FSLYP/AE and B3LYP/ECP give slightly worse agreement with experiment, and FSLYP/ECP is the only method among the ones we studied that gives an unacceptably large error, underestimating the dissociation energy of Ni-2 by 28%, and being in the largest disagreement with the experiment and the other theoretical predictions. We also find that for Ni-2, the spin projection for the broken-symmetry unrestricted singlet states changes the ordering of the states, but the splittings are less than 10 meV. All our calculations predict a deltadelta-hole ground state for Ni-2 and delta-hole ground state for NiH. Upon spin projection of the singlet state of Ni-2, almost all of our calculations: Becke98 and FSLYP both AE and ECP and B3LYP/AE predict (1)(d(x 2-y 2)(A)d(x 2-y 2)(B)) or (1)(d(xy)(A)d(xy)(B)) ground state, which is a mixture of (1)Sigma(g)(+) and (1)Gamma(g). B3LYP/ECP predicts a (3)(d(x 2-y 2)(A)d(xy)(B)) (mixture of (3)Sigma(g)(-) and (3)Gamma(u)) ground state virtually degenerate with the (1)(d(x 2-y 2)(A)d(x 2-y 2)(B))/(1)(d(xy)(A)d(xy)(B)) state. The doublet delta-hole ground state of NiH predicted by all our calculations is in agreement with the experimentally predicted (2)Delta ground state. For Ni-2, all our results are consistent with the experimentally predicted ground state of 0(g)(+) (a mixture of (1)Sigma(g)(+) and (3)Sigma(g)(-)) or 0(u)(-) (a mixture of (1)Sigma(u)(-) and (3)Sigma(u)(+)). (C) 2004 American Institute of Physics.