* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl
* LME/ShFE arb: http://bit.ly/2wZSAEz (Adds comments, updates prices, changes dateline from BEIJING)
LONDON, Nov 3 (Reuters) - Zinc dipped on Friday as Chinese inventories rose while copper and nickel struggled to move higher after a rally moved too quickly based on a surge in demand from electric vehicles (EVs).
A proposal to scrap U.S. subsidies for EVs helped put a damper on excitement by investors during the LME Week industry event in London about the potential for strong demand from the EV growth story for metals such as copper and nickel.
Three-month London Metal Exchange nickel has climbed by over $1,100 a tonne since Monday, marking its biggest two-day jump in more than three years on Tuesday and Wednesday on positive sentiment about EVs.
"Right now if you look at the prevailing fundamentals, prices are probably above what is justified after all the euphoria of this week," said Robin Bhar, head of metals research, Societe Generale.
"Between now and the next 12 months we've got adequate supply and spreads are generally in contango. Nickel is probably $1,000 above fair value, so that needs to correct."
Most hedge funds close out their fiscal year at the end of November so will want to take profits before then, Bhar added.
* ZINC: LME benchmark zinc was down 0.8 percent at $3,232 a tonne by 1148 GMT as inventories rose in China.
* SHANGHAI STOCKS: Weekly data on Friday showed zinc inventories in warehouses monitored by the Shanghai Futures Exchange <ZN-STX-SGH> jumped 22 percent while copper stocks climbed 18 percent, indicating supplies were adequate.
* COPPER: LME three month copper edged up 0.2 percent to $6,942.50 a tonne after ending the previous session little changed.
* EV SUBSIDIES: Also weighing on nickel and copper was news that U.S. House Republicans are proposing to eliminate the $7,500 tax credit for electric vehicles at the end of the year.
* LME NICKEL: LME three-month nickel added 0.3 percent to $12,640 a tonne. The contract hit its highest in more than two years at $13,030 a tonne on Wednesday.
* ALUMINIUM: LME aluminium gained 0.8 percent to $2,190 a tonne, with looming production curbs on Chinese smelters likely to come back into focus next week as traders return from LME Week.
* ALUMINIUM MARGINS: A jump in raw material costs has trimmed aluminium producers' strong margins in recent months, an executive of Russian aluminium giant Rusal said. (Additional reporting by Tom Daly in Beijing; Editing by Keith Weir)