* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl
* LME/ShFE arb: http://bit.ly/2wZSAEz (Adds analyst comment, updates prices, changes dateline from BEIJING)
LONDON, Jan 26 (Reuters) - Zinc held on to a 10-year high on Friday as a dollar rally ran out of steam and inventories slipped to their lowest levels since 2008, indicating tight supply.
Benchmark LME zinc failed to trade in official rings but was bid up 0.4 percent to $3,480 per tonne. The metal is in its seventh straight week of gains, the longest weekly winning streak since early 2016.
ING commodities strategist Oliver Nugent said there was a tightness in supply of zinc, boosted by a rise in canceled warrants - metal earmarked for delivery - in the LME approved warehouses.
"We have had so much support this week from the dollar, it's all eyes on the dollar," he added.
Fears over potential supply shortages and another drop in on-warrant inventories available to the market are helping to support the price of zinc.
PRICES: Zinc, used primarily to galvanize steel, is up about 14 percent since a December low. It rose 29 percent in 2017.
INVENTORIES: LME inventories <MZNSTX-TOTAL> have tumbled about 58 percent over the past 12 months to 178,025 tonnes after closures and suspensions of big mines in recent years. Headline stocks are at their lowest since November 2008.
CHINA DATE: Data from China on Thursday showed December imports of refined zinc jumped 59 percent year-on-year.
DOLLAR: The dollar index was set for its biggest monthly fall in nearly two years as comments by senior U.S. officials this week backing a weak dollar reverberated through currency markets.
A weaker dollar makes commodities priced in the greenback cheaper for buyers using other currencies.
LME COPPER: Three-month copper fell 0.4 percent to $7,108 per tonne in official rings. Copper is set for a weekly rise of over 1 percent.
COPPER INVENTORIES: On-warrant copper stocks <MCUSTX-TOTAL>, those not earmarked for delivery, have shot up 70 percent since Jan. 17 to 258,675 tonnes.
NICKEL: Nickel inched up 0.6 percent to $13,770 per tonne and on track to end the week up 8 percent. This is the biggest weekly jump since early November.
FREEPORT: Freeport-McMoRan Inc said it was edging closer to a permit deal with Indonesia for its massive Grasberg mine, but the world's second-biggest copper producer cautioned that it has not yet struck any formal agreements.
COLUMN: What does looming U.S.-China trade showdown mean for aluminum?
PRICES: Aluminium was flat at $2,240 per tonne, lead was slightly lower at $2,603, and tin was up 1.7 percent to $21,750.
(Additional reporting by Tom Daly in BEIJING)