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METALS-Zinc retreats from decade high, inventory falls

* LME/ShFE arb: http://bit.ly/2wZSAEz (Adds closing prices)

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 ended 0.5 percent lower at $3,286 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 it's 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 dipped, indicating a 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 added 1.3 percent to reach $2,592 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.

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.

NICKEL EXPORTS: Indonesia as of the end of September had exported 1.49 million wet metric tons (wmt) of nickel ore and 0.49 million wmt of bauxite, the director of minerals at the energy and mining ministry told Reuters.

Benchmark nickel closed at $10,535 per tonne, down 0.7 percent.

OTHER METALS: Three-month copper ended 2.7 percent higher at $6,700, its highest in nearly a month. Aluminium inched up 0.2 percent to $2,171. Tin finished 0.8 percent higher at $20,950 after earlier touching its highest since January at $21,180.

(Additional reporting by James Regan in Sydney; editing by David Evans and Alexander Smith)