* Zinc hits highest since Aug. 9
* Strike ends at Alcoa Australia alumina, bauxite operations
* Shanghai zinc stocks fall to lowest since September 2007
* Shorts cover positions ahead of quarter end, China holiday (Updates with closing prices)
By Eric Onstad
LONDON, Sept 28 (Reuters) - Zinc prices hit a seven-week high on Friday after stocks in Shanghai slid to the lowest in more than a decade and other metals rallied as speculators cancelled bearish positions.
Prices broke above technical levels, spurring further bursts of buying on the last trading day of the quarter, traders said.
Zinc inventories in warehouses monitored by the Shanghai Futures Exchange ZN-STX-SGH slid 13.6 percent to 29,204 tonnes, the lowest since September 2007, weekly data showed.
“We’re talking 10-year lows in inventory. While there’s definitely more mine supply coming through in zinc, the refined inventories are tight,” said analyst Colin Hamilton at BMO Capital Markets in London.
Benchmark zinc on the London Metal Exchange was the biggest gainer, surging 4.2 percent to close at $2,612 a tonne, the strongest since Aug. 9.
Zinc shed about 8 percent during the quarter in its third straight quarterly loss.
* QUARTER END: Speculators were tidying up their portfolios before the end of the quarter and also before China goes on a week-long market holiday, traders said.
“We’ve seen many of these metals relatively short in positioning, so some of that might be cleaned up ahead of quarter end,” Hamilton said.
* ALCOA STRIKE: Unionised workers at Alcoa’s Western Australian alumina and bauxite operations agreed on Friday to end a strike that lasted more than six weeks.
“It looks like some alumina trades are coming in significantly lower on the back of that news,” Hamilton said.
* ALUMINIUM: LME aluminium gained 1.6 percent to end at $2,062 a tonne, erasing losses after touching a one-week low of $2,016.
* WINTER CUTS: Weighing on aluminium was news on Thursday that China decided not to impose blanket cuts on industrial output in 28 northern cities this winter, expected to result in less restrictions on aluminium supply.
* NICKEL: LME nickel added 0.3 percent to finish at $12,600 and ended the third quarter down 15.3 percent, its biggest quarterly drop in three years.
* LEAD: Lead climbed 1.3 percent to $2,036, sliding 15.5 percent during the quarter in the steepest quarterly loss since 2001.
“Ahead of the October options expiry next week we note the $2,000 show a combined open interest of just 75 lots. However the $1,950s show 257 of put open interest,” Alastair Munro at Marex Spectron said in a note.
* PRICES: Copper rose 1.2 percent to close at $6,258 a tonne and tin added 0.1 percent to $18,875.
Additional reporting by Tom Daly in Beijing Editing by Elaine Hardcastle and Edmund Blair