The world's largest miner of zinc ore said the decision will slash a third of its annual output, mostly from mines in Australia, where 535 jobs will be lost, as well as from operations in South America and Kazakhstan.

Zinc prices have plummeted 30 percent since May to five-year lows, and Glencore's move follows recent cuts in copper output and could signal that metal prices are nearing the bottom of the cycle, analysts said.

"Certainly for the markets they're dominant in, nickel and zinc in particular, it does raise the spectre of markets getting a bit more positive," said analyst Daniel Hynes of ANZ in Sydney.

"As for whether it's enough impetus for a more sustainable rally in metals prices, we do need to see one or two others join this move."

The production cut follows an array of measures the company announced last month to help it slash its $30 billion in net debt by a third, including lower copper production, suspension of its dividends and a sale of new shares.

Current zinc prices "do not correctly value the scarcity of our zinc resources," Glencore said in a statement to the Hong Kong Stock Exchange.

The cuts will reduce the company's fourth-quarter production by 100,000 tonnes. It had previously expected to produce between 1.52 million tonnes and 1.57 million tonnes of zinc this year.

Mine supply of zinc was already set to shrink this year due to the closure of MMG's huge Century zinc mine in Australia, which also accounts for about four percent of global supply, and Ireland's Lisheen, owned by India's Vedanta.

The price of lead, which is often mined with zinc, also jumped, by about 6 percent.

"Glencore remains positive about the medium and long term outlook for zinc, lead and silver; however we are taking a proactive approach to manage our production in response to current prices," the company said.

A Glencore spokesman in Australia declined to say how much the output cut would save in terms of working capital or pay, or how long it expected the cuts to last.

LME zinc jumped more than 10 percent to $1,845 a tonne at 1600 GMT, its largest single-day gain in more than five years.

(Reporting by Melanie Burton; Additional reporting by Sonali Paul; Editing by Richard Pullin and Bernadette Baum)

By Melanie Burton