(Adds comment, detail, updates prices) MELBOURNE, Oct 9 (Reuters) - Shanghai zinc surged 4 percent to its highest in nearly a decade on Monday, lifted by supply concerns as well as expectations for improved liquidity in markets in China, the world's top metals consumer. Returning from a week of holidays, markets broadly welcomed a move by China's central bank to lower reserve rate requirements for some banks that meet certain requirements for lending to small business and the agricultural sectors.
"Overall the (metals) complex has held up well," Marex Spectron's head of Asian institutional sales Matt France wrote in a report. France said that a reversal in steel prices later in the day could drag down metals. Zinc and nickel in particular, inputs to the galvanized and stainless steel sectors, tend to track steel prices. "But overall it does feel like the structure is intact so bigger dips should be (bought) for now."
* SHFE ZINC: Shanghai Futures Exchange zinc rallied by 4 percent to hit its most expensive since March 2008 at 26,935 yuan ($4,048) a tonne before paring gains to 3.4 pct by 0554 GMT
* ZINC SUPPLY: Concerns about dwindling supply have lit a fire under prices as the closure of several giant mines last year has crimped production of refined metal. In China, Shfe zinc stocks are the lowest since early 2009, just under 65,000 tonnes. <ZN-STX-SGH>
* LME ZINC: On the London Metal Exchange, zinc prices climbed by 1 percent to $3,268 a tonne. LME prices, which have climbed by 27 percent so this year, last week hit $3,308.75 which was the loftiest since August 2007.
* LME zinc cash to three month spreads are also showing the most stress in a decade, with LME cash prices more than $65 above the benchmark contract several times in the past month. <CMZN0-3>
* COPPER: Elsewhere, LME copper edged up by 0.1 percent to $6,675 a tonne, while SHFE copper rose by 1.7 percent to 52,110 yuan ($7,855) a tonne. LME nickel y 2 percent alongside higher prices for steel.
* CHINA PMI: Potentially capping metals prices for the session, activity in China's services sector grew at its slowest pace in 21 months in September as the pace of new business cooled, a private survey showed.
* HOLIDAYS: Columbus Day in the U.S. and a public holiday in Japan thinned out trading volumes even as Chinese markets reopened.
* INVESTORS: Hedge funds and money managers reduced their net long positions in COMEX copper futures and options for the fourth straight week, in the week to Oct. 3, U.S. Commodity Futures Trading Commission data showed on Friday.
* COMING UP: Germany Industrial output Aug at 0600 GMT
Three month LME copper 6678 Most active ShFE copper 52110 Three month LME aluminium 2154 Most active ShFE aluminium 16520 Three month LME zinc 3267.5 Most active ShFE zinc 26735 Three month LME lead 2528.5 Most active ShFE lead 21220 Three month LME nickel 10765 Most active ShFE nickel 86990 Three month LME tin 20800 Most active ShFE tin 147800 LME/SHFE COPPER LMESHFCUc3 295.69 LME/SHFE ALUMINIUM LMESHFALc3 -37.83 LME/SHFE ZINC LMESHFZNc3 612.67 LME/SHFE LEAD LMESHFPBc3 99.68 LME/SHFE NICKEL LMESHFNIc3 2447.78
($1 = 6.6533 Chinese yuan renminbi)
($1 = 6.6343 Chinese yuan renminbi)
(Reporting by Melanie Burton; Editing by Kenneth Maxwell)