* Copper touches three-week high
* LME/ShFE arb: bit.ly/2wZSAEz
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices)
By Eric Onstad
LONDON, May 22 (Reuters) - Lead prices touched their highest in 2-1/2 months on Tuesday, supported by concern over potential shortages and as investors sold zinc and bought lead.
Environmental inspections at secondary lead smelters in China have reduced supply in recent months, analysts said.
"Lead's a tight market, and it appears that traders are quite actively shorting the zinc/lead ratio, which has been overstretched for a long time," said Oliver Nugent, commodities strategist at ING Bank in Amsterdam.
The ratio of zinc to lead - which is often traded because the two metals are usually found in the same ore bodies - has slid to 1.25, its lowest since December, after touching 1.39 in April and March, the highest since 2007.
Nugent said he was wary of the rally because of heavy speculation in China.
"There's a lot of speculation in this Shanghai lead rally, a lot of froth coming in to chase this up. My worry is they don't stick around for long," he said.
* LME LEAD: Benchmark lead on the London Metal Exchange gained 2.7 percent to $2,475 a tonne in closing open outcry trading. That represents the highest level since March 1.
* SHANGHAI LEAD: Shanghai Futures Exchange lead jumped as much as 3.6 percent to its highest since October at 20,465 yuan a tonne.
* CRACKDOWN: "Authorities are clamping down on recycling plants in China, which are the source of nearly 60 percent of lead," ANZ said in a note. "The closures come amid a widening import arbitrage into China and falling inventories on both the LME and ShFE."
* ZINC: LME zinc shed 1.6 percent to end at $3,056 a tonne, hit as traders sold the zinc/lead ratio, Nugent said.
* COPPER: Three-month LME copper climbed 1.5 percent to finish at $6,979 a tonne after hitting $6,999, the strongest since April 26.
Copper has been lifted by buying in the Far East as well as by Commodity Trader Advisor (CTA) funds, Marex Spectron's Alastair Munro said in a note.
* PROTESTS: Copper was also supported by trouble at a Vedanta Resources-controlled copper smelter in southern India, where at least nine people were killed on Tuesday after police fired at protesters calling for the plant's closure.
* NICKEL: LME nickel added 0.7 percent to $14,780 a tonne. It was the largest speculative long of the LME complex at 12.2 percent of open interest, according estimates by broker Marex Spectron.
"LME nickel’s bounce off the 55-day moving average at $13,853.50 has further to go with the minor $15,000 mark remaining in focus," Commerzbank technical analyst Axel Rudolph said in a note.
* PRICES: Aluminium edged down 0.4 percent to close at $2,270 a tonne while tin fell 0.8 percent to $20,530.
Additional reporting by Naveen Thukral in Singapore Editing by Alexandra Hudson and David Goodman