* LME/ShFE arb: http://bit.ly/2wZSAEz (Updates throughout)
LONDON, Oct 5 (Reuters) - A rally in zinc prices ran out of steam on Thursday after hitting a 10-year high, although the metal found support from declining inventories and strong demand.
Benchmark zinc on the London Metal Exchange slipped 0.4 percent to $3,289 per tonne. The price of the metal, used to galvanise steel, on Wednesday touched its highest since August 2007 at $3,308.75 and is up 28 percent to far this year.
"After the recent strong rally its normal for the price to find itself under pressure," Commerzbank's head of commodities research Eugene Weinberg said, adding that profit-taking could continue because zinc had risen too far.
"We have been positive on fundamentals of zinc at lower prices but now those factors are already priced in so we don't see upside potential from current levels," he said.
CHINA DEMAND: China has been curbing domestic output of industrial materials, primarily from ageing plants and mines, that are expected to result in higher demand for imports.
STOCKS: Stocks of zinc inched lower on Thursday, indicating shortage of supply was still a supporting factor. Zinc stocks in LME-approved warehouses are down 45 percent over the last year. <MZNSTX-TOTAL>
DOLLAR: Putting pressure on zinc and other commodities, the dollar firmed versus a currency basket, making dollar-priced metals costlier for non-U.S. investors.
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 6 percent.
LEAD: Benchmark lead slipped 0.2 percent to $2,556.50 a tonne. In the previous session, 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.
FINANCIAL MARKETS: Global stocks eased off record highs as investors anticipated minutes from the European Central Bank's last meeting for clues to its exit from ultra-easy monetary policy.
PHILIPPINES: Philippines confirmed Roy Cimatu as the new environment minister but it was still unclear whether Cimatu would support the crackdown on the country's mainly nickel mining industry.
Benchmark nickel was steady at $10,605 per tonne. In nickel technicals, resistance was around $10,840 a break above that opens up potential for $11,040, Marex Spectron's Alastair Munro said.
OTHER METALS: Three-month copper gained 0.6 percent to $6,563, aluminium was off 0.5 percent to $2,156, while tin rose 0.6 percent to $20,900.
(Additional reporting by James Regan in Sydney; editing by Alexander Smith)