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METALS-Tight supplies propel zinc prices to highest since 2007

* LME/ShFE arb: http://bit.ly/2wZSAEz

* Zinc cancelled warrants at 55 percent of total LME stocks

* Premium for cash zinc over 3-mth around $50 a tonne (Recasts, adds comment, changes dateline from Sydney)

LONDON, Oct 4 (Reuters) - Zinc prices hit their highest in more than 10 years on Wednesday as tight supplies created by mine closures and healthy demand from top consumer China boosted sentiment.

Benchmark zinc on the London Metal Exchange was up 0.5 percent at $3,281 a tonne at 1029 GMT. Earlier the metal used to rust-proof steel touched $3,295.5, its highest since August 2007.

"There is tightness ... mine closures from a few years ago are feeding through. But mine supply has picked up this year, which suggests tightness will start to fade as we move into next year," said Capital Economics analyst Caroline Bain.

"The demand outlook looks subdued, particularly if Chinese authorities close steel capacity ... This would mean zinc demand slows in the fourth quarter and early next year.

ENVIRONMENT: China has pledged to cut average concentrations of airborne particles known as PM2.5 by more than 15 percent year-on-year in the winter months in 28 northern cities to meet key smog targets. This means curbing activity in polluting industries such as steel production and zinc smelting.

CHINA IMPORTS: China's zinc imports at 65,609 tonnes in August are up nearly 160 percent over the same month last year. But the year-to-date total at 314,086 tonnes is down nearly six percent.

CHINA STEEL: An official gauge of China's steel industry declined in September.

STEEL USAGE: About half of global zinc consumption -- estimated at around 15 million tonnes this year -- is used to galvanise steel.

LME STOCKS: Stocks of zinc in LME approved warehouses at 251,750 tonnes are down more than 40 percent since the start of 2017. Cancelled warrants -- metal earmarked for delivery -- at 55 percent of total stocks have also reinforced worries about shortages. <MZNSTX-TOTAL>

HOLDINGS: Large holdings of zinc warrants and cash contracts have also fuelled concern about nearby supplies on the LME market. The premium for the cash over the three-month contract is holding around $50 a tonne. <CMZN0-3>

LEAD: Benchmark lead was down 0.2 percent at $2,585 a tonne. Earlier the metal used to make batteries rose to $2,620.50, its highest since August 2011. The environmental crackdown in China has also reduced supplies of lead, which is mined alongside zinc.

PHILIPPINES: The nickel market is waiting to see what the new Philippine environment secretary, Roy Cimatu, has in store for the country's mining industry. His predecessor had ordered 26 of 41 mines in the world's top nickel ore supplier be shut or suspended to protect water resources.

PRICES: Copper was down 0.3 percent at $6,501 a tonne, aluminium gained 0.9 percent to $2,148, tin slipped 0.1 percent to $20,780 and nickel gained one percent to $10,725.

(Editing by David Evans)