* Lead marks 10-month high
* Aluminium touches two-week low
* LME/ShFE arb: http://bit.ly/2wZSAEz (Recasts, adds comments, updates with closing prices)
LONDON, Oct 2 (Reuters) - Zinc prices hit their highest in over 10 years on Monday as speculators bet environmental inspections would hit output in China and as one party kept a tight grip on London Metal Exchange inventories.
About 60 percent of lead-zinc mines were undergoing month-long shutdowns during environment inspections in Sichuan province.
"Further smelter closures during the upcoming winter months cannot be ruled out," analyst Edward Meir at INTL FCStone said in a note.
"Prices have acted perkier ...(and) kept fund money pretty much committed to the long side."
Zinc was the top performer on the LME on Monday with three month futures touching a high of $3,248 a tonne, the strongest since August 2007. It pared gains to $3,236 by the close, a gain of 2.3 percent.
* ZINC STOCKS: Available LME zinc inventories <MZNSTX-TOTAL> fell by 16,950 tonnes on Monday, bringing the decline so far this year to 64 percent. One party controlled 50-80 percent of those stocks <0#LME-WHL>, LME data showed.
* ZINC TIGHTNESS: The premium of cash zinc over three months was $37 a tonne, down from a peak of $66 last week, but still strong compared with a high of $11 during the year until mid-September.
* LEAD: Benchmark LME lead hit a high of $2,548 a tonne, the highest since late November 2016. It pulled back from the peak to finish the day at $2,518, a rise of 1.3 percent.
Lead smelters were also hit by the Chinese inspections while United Nations sanctions on North Korea has hit China's No. 2 lead ore and concentrate supplier.
* LEAD BACKWARDATION: Cash lead moved to a $7 premium against the three-month contract <CMPB0-3>, the highest since April. A backwardation, when a nearby contract is higher than a forward one, usually indicates lack of supply.
* ALUMINIUM: Benchmark LME aluminium finished down 0.1 percent at $2,101 a tonne after touching $2,082, the lowest since Sept. 18, as investors locked in profits while they waited for evidence that an environmental crackdown in China would cut output.
"While there's been talk of the cuts, we really haven't seen them yet. I do think they're still coming, but people are looking for a little bit more evidence," said Colin Hamilton, director of commodities research at BMO Capital Markets in London.
* COPPER: LME copper rose 0.2 percent to end at $6,493 a tonne, with gains capped after news that Indonesia's giant Grasberg mine can continue to export copper concentrate even if permit talks are not resolved this month.
* CHINA FACTORIES: Some metals were supported by data showing the manufacturing sector in top metals consumer China expanded at the fastest clip in more than five years and after Beijing reduced bank reserve requirements to boost lending.
* PRICES: LME nickel gave up 1.1 percent to close at $10,390 a tonne, while tin was unchanged at $20,675.
(Additional reporting by Manolo Serapio Jr. in Manila; Editing by Jane Merriman and David Evans)