METALS-Copper touches 4-week high on potential China shortages

* LME/ShFE arb: http://bit.ly/2wZSAEz (Adds comments, updates prices, changes dateline from SYDNEY)

LONDON, Oct 10 (Reuters) - Copper prices touched their highest in four weeks on Tuesday as speculators kept buying in response to expectations of potential shortages in China, while nickel and zinc slipped on the back of losses in steel.

China announced plans in July and August to curb waste imports, including scrap metal, but it was unclear how severe the restrictions would be on copper.

"I think copper's pricing in expectations of the Chinese restrictions on scrap imports, but to me the price looks a little high based on current fundamentals," Colin Hamilton, director of commodities research at BMO Capital Markets, said.

Investors were also looking ahead to an increase in demand in coming months, John Meyer at SP Angel, said. "Concerns of tight supply ahead of a traditional peak demand season for copper is expected to lend support to copper prices throughout the day," he said in a note.

Benchmark copper on the London Metal Exchange was up 0.4 percent at $6,691.50 a tonne at 1035 GMT after touching $6,735, the highest since Sept. 12.

CONGO: Helping to lift copper was news that Congo's mines minister has ordered a joint venture of Chinese investors to stop exporting raw copper and cobalt before processing because of their low value on international markets.

FERROUS: Steel-linked metals zinc and nickel were pressured after Shanghai rebar steel futures slid nearly 5 percent while steelmaking raw materials extended losses on worries over plentiful supply.

NICKEL/ZINC: Three month LME nickel, largely used to make stainless steel, shed 0.7 percent to $10,940 a tonne.

Zinc, mainly used in galvanising steel to make it rust resistant, edged down 0.2 percent to $3,228 a tonne. It is one of the top LME performers, rallying 25 percent this year on worries of shortages due to mine closures and an environmental crackdown in China.

ZINC SUPPLY: Also weighing on zinc was news that Vedanta Resources boosted mined metal production at its Indian zinc unit by 42 percent in the first half of the year, highlighting the potential of more supply coming on the market.

ZINC SPREADS: Falls in zinc were modest because the premium of the cash contract over the three-month one touched a new high of $68 a tonne, the strongest since 2007, indicating short-term shortages.

DOMINANT POSITION: Zinc prices have been bolstered by the large position held by one party, which controls 50-80 percent of available LME zinc inventories, according to LME data. <0#LME-WHL>

(Reporting by Eric Onstad. Editing by Jane Merriman)