April 13 (Reuters) - Shanghai zinc prices rallied to their highest since July 2007 on Wednesday, and nickel surged nearly 8%, on worries over supply shortages and better demand prospects in the metals market due to easing of COVID-19 curbs in top consumer China.

The most-traded May zinc contract on the Shanghai Futures Exchange was up 4.5% at 28,750 yuan ($4,516.32) a tonne, as of 0534 GMT.

Benchmark zinc on the London Metal Exchange was up 2.8% at $4,500 a tonne after having risen to $4,512.50, the highest since March 8. Prices of the metal, used to galvanise steel, hit a record high of $4,896 a tonne last month.

"Zinc inventories have drawn down sharply and the situation is worsening for European smelters to keep their margins positive amid fears of another power crisis," said ANZ analyst Soni Kumari.

"The market sentiment for industrial metals was boosted by easing of transportation bottlenecks in China ... further boost came from increasing economic support," she added.

* INVENTORIES: Zinc stocks in LME-registered warehouses at 120,825 tonnes are at their lowest since June 2020 and down more than 40% since December.

* NICKEL: ShFE nickel jumped 6.7% to 218,440 yuan ($34,314.62) a tonne, after rising to its highest since March 31 earlier in the session.

* China's refined zinc output fell on both an annual and monthly basis in March as the COVID-19 outbreak disrupted transportation of raw materials, state-backed research house Antaike said.

* LME PRICES: Copper rose 0.5% to $10,307 a tonne, aluminium was up 1.2% to $3,305, lead gained 1.2% to $2,421.50 and tin edged 0.5% higher to $43,000.

* Uganda said on Tuesday it was inviting expressions of interest from investors to restart a vast copper mine in the country's west that also holds significant cobalt deposits.

* China's exports rose 13.4% in yuan terms in January-March from a year earlier, while imports increased 7.5%, customs data showed on Wednesday.

MARKETS NEWS

* Asian shares were boosted by U.S. inflation figures that were better than markets' worst expectations, which caused U.S. yields to pause their march higher, though Chinese and Hong Kong stocks remained pressured by COVID-19.

($1 = 6.3658 yuan) (Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips and Uttaresh.V)