* Dalian futures hit upside limit, Shanghai rebar up 2 pct
* Chinese infrastructure investment may pick up
By Manolo Serapio Jr
MANILA, Sept 9 (Reuters) - Iron ore futures in China climbed 5 percent on Wednesday, buoyed by hopes that infrastructure spending would gain pace for the remainder of the year and boost steel demand.
Steel demand in China, the world's top consumer, has continued to shrink this year amid a slowing economy, spurring more producers to sell overseas. China's steel consumption fell last year for the first time since 1981.
Infrastructure spending on some sectors such as telecommunications has only been "30-40 percent" completed, and local governments may speed up investment for the rest of the year, said Wang Li, analyst at CRU Group in Beijing.
"There are some uncertainties in the overall economy but the Chinese government has bigger power and influence on the economy so I'm not too bearish," said Wang.
The most-traded January iron ore contract on the Dalian Commodity Exchange DCIOcv1 was up 5 percent at 402 yuan ($63) a tonne by 0307 GMT, the daily ceiling set by the bourse. It was the highest level since July 3.
On the Shanghai Futures Exchange, the January rebar contract SRBcv1 rose 2.1 percent to 1,970 yuan a tonne after touching a 1-1/2-week high of 1,979 yuan.
The 14-percent decline in China's iron ore imports in August from July possibly reflects slower supply additions, said Wang. ID:nL4N11D1B4
"I think the major miners may adjust their business cycle according to Chinese demand," she said.
Iron ore prices have been hurt by worries over a global glut amid signals that China's steel demand may be near its peak.
But the steelmaking raw material, after recovering from a decade-low of $44.10 a tonne in July, has managed to stay above $50 since then.
On Tuesday, iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose 0.7 percent to $56.40 a tonne, a level last seen on Aug. 5, according to The Steel Index.
But Commonwealth Bank of Australia believes weak Chinese steel demand will continue to cut the country's iron ore imports.
"While we still expect low-cost iron ore supply from Brazil and Australia to displace high-cost supply in China, we may still see China's iron ore imports fall this year due to weak steel production and demand," the bank said in a note.
Rebar and iron ore prices at 0307 GMT
Contract
Last
Change Pct Change SHFE REBAR JAN6
1970
+41.00
+2.13 DALIAN IRON ORE DCE DCIO JAN6
402
+19.00
+4.96 SGX IRON ORE FUTURES SEP
57.05
+1.77
+3.20 THE STEEL INDEX 62 PCT INDEX
56.4
+0.40
+0.71 METAL BULLETIN INDEX
57.42
+0.57
+1.00
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3728 Chinese yuan)