SYDNEY, Jan 5 (Reuters) – London zinc eased on Friday as some investors took profits after overnight prices touched their highest in over a decade due to supply concerns, while the Shanghai market firmed. Zinc stocks held in London Metal Exchange warehouses fell 250 tonnes to their lowest since late 2008, data showed on Thursday, down by a third from their October peak. Commodities traders and analysts say under-investment in new zinc mines as older ones close and Chinese efforts to reduce industry-generated pollution are stoking expectations for continued supply deficits in the months ahead. The global zinc market deficit widened to 36,900 tonnes in October from a revised deficit of 35,900 tonnes in September, the latest figures from the International Lead and Zinc Study Group show. FUNDAMENTALS: * LONDON ZINC: Three-month LME zinc had dropped 0.17 percent to $3,356 a tonne by 0120 GMT. The contract on Thursday topped out at $3,364 a tonne, its highest since August, 2007. * SHANGHAI ZINC: The most-traded zinc contract on the Shanghai Futures Exchange was up 0.7 percent at 25,590 yuan ($3,949.07) a tonne. It earlier marked its strongest since Nov. 1 at 26,140 yuan a tonne. * DOLLAR DOWN: The euro hovered near a three-year high against the sagging dollar on Friday, while improving investor risk appetite weighed on the yen. * COPPER, NICKEL: LME copper added 0.2 percent to $7,203 a tonne, LME aluminium was flat at $2,250 and nickel was down $25 at $12,625. * CHINA STEEL BAN: China will continue to “unswervingly” cut existing steel capacity and “strictly” ban the launch any new steelmaking facilities in 2018, its government said this week.

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