* Expectations of restocking after Lunar New Year break
* Chinese markets to be shut Jan. 27-Feb. 2
By Manolo Serapio Jr
MANILA, Jan 26 (Reuters) - Chinese steel and iron ore futures rose for a third session on Thursday as investors banked on firm demand after the Lunar New Year holiday.
But trading in the physical market remained slow with many participants already away for the week-long break that starts on Friday.
The most-active rebar on the Shanghai Futures Exchange SRBcv1 was up 1.6 percent at 3,341 yuan ($486) a tonne by midday.
On the Dalian Commodity Exchange DCIOcv1 , the most-traded iron ore gained 0.9 percent to 645 yuan per tonne.
Steel traders and buyers are expected to restock around mid-February when most in the market would be back at work, said CRU analyst Richard Lu.
"A lot of buyers will replenish their stocks and that will be the main driver to lift demand after the holiday," said Lu.
Shanghai rebar futures have risen nearly 15 percent so far this month, extending last year's rally that had been spurred by China's efforts to eliminate excess production capacity as well as stimulate economic activity.
That has fueled a similar surge in iron ore futures, up more than 16 percent in January.
But spot iron ore prices have pulled back after recent gains with trading nearly halting in China ahead of the holiday.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB slipped 0.2 percent to $82.49 a tonne on Wednesday, according to Metal Bulletin.
"Trading activity is almost non-existent in the spot market, so both buyers and sellers no longer find the need to adjust prices," Metal Bulletin said. ($1 = 6.8799 Chinese yuan)