LONDON, Jan 15 (Reuters) – Zinc hit another 10-year high on Monday as base metals rallied across the board on the back of a faltering dollar, with expectations that the European Central Bank may start trimming its stimulus programme lifting the euro to a three-year peak. The dollar’s consequent weakness made assets priced in the U.S. unit cheaper for holders of other currencies. “It is a dollar story this morning which is behind this move,” ING analyst Warren Patterson said. “If you look at the speculative position in the metals, there is potential for further upside, if we continue to get positive economic data, and strong manufacturing data.” Fears over potential supply shortages and another drop in on-warrant inventories available to the market are helping support the price of zinc, used primarily to galvanise steel. The market has been disappointed not to have seen more zinc production capacity coming back onto the market from Glencore , Patterson said, after the company curtailed 500,000 tonnes of capacity from late 2015. Glencore announced plans in December to restart its Lady Loretta mine in the first half of this year. “At least for the first half of this year, the zinc market is going to be fairly tight,” he said. * ZINC PRICES: Three-month zinc on the London Metal Exchange was up 1.5 percent at $3,435.50 a tonne at 1030 GMT, having earlier touched a peak of $3,440 a tonne, its highest since August 2007. * ZINC INVENTORIES: On-warrant zinc stocks in LME-registered warehouses fell by 10,000 tonnes to 116,675 tonnes, their lowest since early October, data showed on Monday, after fresh cancellations in New Orleans. Headline stocks are unchanged. * COPPER: LME copper was up 1.7 percent at $7,231 a tonne. Prices have oscillated around the range of $7,070-$7,315 since late December notably due to resilient demand from China. * PERU: Damage in world No. 2 copper producer Peru appeared limited after an earthquake with a magnitude of 7.3 struck on Sunday. No victims have been reported, the governor of Peru’s Arequipa region said on Twitter. * ALUMINIUM PRICES: LME aluminium was up 1.3 percent at $2,242.50 a tonne. In late December, it reached $2,290.50 a tonne, its highest in more than four years, partly after output cuts in top producer China eroded global supply. * INVESTORS: Hedge funds and money managers trimmed net long positions in COMEX copper contracts in the week to Jan. 9, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. * OTHER METALS: LME nickel was up 1.9 percent at $12,965 a tonne, while tin was flat at $20,270 a tonne, off an earlier three-month high of $20,301. Lead was up 1.4 percent at $2,571 a tonne.

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