* Dalian iron ore down 7 pct on week, Shanghai rebar falls 5.5 pct
* Iron ore market overbought, may fall to $70-$80/T - Sucden
By Manolo Serapio Jr
MANILA, March 24 (Reuters) - Chinese steel and iron ore futures fell for a fourth day on Friday, adding to a nearly week-long selloff that led to both commodities posting their biggest weekly drop in three months.
Investors cut bets in steel and iron ore this week after recent rapid gains as ample inventories suggest demand in top consumer China is not picking up as well as had been expected.
The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed down 0.4 percent at 3,140 yuan ($456) a tonne, after falling as far as 3,097 yuan, its lowest since March 9.
Iron ore on the Dalian Commodity Exchange DCIOcv1 slipped 0.6 percent to end at 580.50 yuan per tonne, having touched 567.50 yuan earlier, its weakest since March 13.
Rebar lost 5.5 percent for the week and iron ore fell 7 percent, biggest weekly drop for both contracts since December.
As futures faltered, so did spot iron ore prices which touched a six-week low on Wednesday before recovering some lost ground on Thursday.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 1.6 percent to $86.36 a tonne on Thursday, according to Metal Bulletin. But the spot benchmark was still down 6.5 percent for the week, on track for its steepest such drop since November.
After rising for the past five months, spot iron ore prices were due for a retracement, analysts at Sucden Financial said in a report.
"The market is overbought and we anticipate a retracement to trade within a range of $70-$80/tonne," they said.
Iron ore stockpiles at China's major ports reached 131 million tonnes last week, the highest since at least 2004, according to SteelHome consultancy. SH-TOT-IRONINV
($1 = 6.8892 Chinese yuan)