* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm20 (Adds comments, updates prices, changes dateline from MELBOURNE)
LONDON, Aug 17 (Reuters) - Aluminum, copper and other base metals edged down from multi-year peaks on Thursday as some investors locked in profits from a steep rally amid doubts about future demand in top metals consumer China.
Speculators have largely fueled a rally on the London Metal Exchange that has seen the index of six LME industrial metals climb 16 percent from early June to Wednesday's close.
"There's a lot of investor optimism at the moment, which in our view will be disappointed," said Caroline Bain, chief commodities economist at Capital Economics in London.
"Chinese policy was being tightened during the first half, and we expect it will come through (in weaker data) over the next few months. Some of the exuberance, some of the price rises fueled by investor buying could be dampened."
Chinese economic data for August could be the trigger for a correction, she added.
Also weighing on metals markets as well as European shares on Thursday were the minutes of the U.S. Federal Reserve, in which policymakers voiced concern over weak U.S. inflation, clouding the outlook for the world's largest economy.
* LME COPPER: LME benchmark copper was down 0.4 percent at $6,507 a tonne by 1043 GMT after advancing to its highest since Nov. 27, 2014 at $6,580. Copper, which rose 2.4 percent on Wednesday, is up 18 percent so far this year.
* COPPER STOCKS: Prices were supported as LME inventories continued to fall on Thursday <MCUSTX-TOTAL>. On-warrant stocks - those not earmarked for delivery and therefore available to investors - have slid 46 percent over the past month.
* ALUMINIUM: LME aluminum slipped 0.6 percent to $2,081 a tonne after climbing to $2,112, its highest since Sept 8, 2014.
* ZINC: LME zinc shed 0.7 percent to $3,098 after hitting its highest since Oct 16, 2007, at $3,147 a tonne.
* CHINESE ZINC: Chinese zinc output fell 6.3 percent year-on-year in July to 476,000 tonnes. "This was the lowest output level on a daily basis (15,400 tons) in over three years ... This is clearly giving rise to concerns about supply bottlenecks," Commerzbank said in a note.
ZINC STOCKS: LME zinc inventories <MZNSTX-TOTAL> have tumbled 42 percent this year to the lowest levels since December 2008.
* SHFE: On the Shanghai Futures Exchange metals maintained their overnight rallies. ShFE zinc rose by its limit of 6 percent and ShFE lead jumped 5 percent. ShFE aluminum, nickel and copper finished up around 3 percent.
* ZINC: Chinese traders are diverting money from steel to zinc on the Shanghai Futures Exchange after a hike in trading fees on Monday cut the appeal of steel even as booming construction activity fuels demand for steel-making essentials like zinc.
*COMING UP: U.S. industrial production for July at 1315 GMT
(Additional reporting by Melanie Burton in Melbourne; editing by Mark Heinrich)