* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm20 (Adds comments, updates prices, changes dateline from MELBOURNE)
LONDON, Sept 6 (Reuters) - Zinc, copper and most other base metals slipped on Wednesday as investors locked in profits from a steep rally in recent weeks that was based more on speculative buying than on underlying physical demand.
The London Metal Exchange index of six industrial metals had surged 21 percent from early June until Monday, but many analysts had warned that prices were moving above levels justified by supply/demand fundamentals.
The expiry of LME options on Wednesday was also influencing the market, traders said.
"We're probably seeing some profit-taking today. Given all these analysts, including myself, saying they've gone too far, some investors may be getting a bit nervous," said Caroline Bain, chief commodities economist at Capital Economics.
It was surprising that there was not more risk-off sentiment in markets due to tensions over North Korea, Bain said, but she added that there also may be some underlying support for metals from the aftermath of Hurricane Harvey.
"It's quite difficult, however, at this stage to work out whether or not it will lead to a boom in auto demand or construction," she added, referring to two key segments that fuel metals demand.
* ZINC: LME benchmark zinc was the biggest LME decliner, falling 1.7 percent to $3,088 a tonne by 1030 GMT after giving up 2 percent on Tuesday. Zinc hit the highest level in a decade of $3,231.75 on Aug. 23.
* STEEL: Also pressuring zinc and nickel, mostly used in the steel sector, was a fall in Chinese rebar steel futures as physical trading cooled.
* NICKEL: Nickel dropped 0.9 percent to $11,970, showing scant reaction to news that protesters stormed a mining event in the Philippines, demanding that mineral extraction be halted in the world's top supplier of nickel ore.
COPPER: Three-month copper dipped 0.2 percent to $6,885.50 a tonne, after climbing to a three-year peak of $6,970 on Tuesday.
* GOLDMAN OUTLOOK: Goldman Sachs said in a report that "momentum and technicals are pointing to further upside risks in copper prices". Chart analysis suggests a target at $7,350 a tonne compared to fair value of $6,200, it said.
"While we expect copper prices to come down over the next six to 12 months to be in line with fundamentals, they are likely to remain volatile in the near term," Goldman added.
* CHINA LEAD MARKET: LME lead bucked the overall weaker trend, rising 0.7 percent to $2,346. The Chinese mainland market for lead is tightening, which can be seen in a rising front-month Shanghai lead contract against the three-month contract. China has been shutting lead smelters as part of environmental inspections.
* LEAD STOCKS: On-warrant LME inventories of lead <MPBSTX-TOTAL, those not earmarked for delivery, rose by 16 percent on Wednesday to 103,175 tonnes.
(Additional reporting by Melanie Burton; Editing by Dale Hudson)