* Steel futures drop for the third day this week
* Spot prices weaken on slower demand
* Investors look for new clues to trade
SHANGHAI, July 20 (Reuters) - Chinese steel futures fell again on Wednesday, taking this week's declines to 9 percent, as investors booked profits amid weakening spot prices and rains in northern cities that have curbed construction demand.
Benchmark October prices for constructoin material rebar on the Shanghai Futures Exchange SRBcv1 dropped 1.2 percent to 2,287 yuan ($341.99) a tonne by the midday break. The decline comes after four weeks of gains.
"Spot prices could not catch up with last week's rally in futures as end users refused to accept big rises. Big rains in some big cities also hit demand," said Wu Wei, an analyst with Yong'an Futures in Hangzhou.
Investors bought steel futures in recent weeks, betting on healthy demand in the world's top consumer and improving economic outlook but started to largely cut positions this week as slower home price rises added concerns to the economy.
"The market is waiting for new signals and investors are holding back on big moves at the moment," Wu added.
Iron ore futures on the Dalian Commodity Exchange DCIOcv1 dropped 1.9 percent to 420 yuan a tonne by midday.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI dropped 2 percent to $55.10 a tonne on Tuesday, the lowest since July 1, according to The Steel Index.
BHP Billiton BHP.AX BLT.L said it aims to boost its iron ore output by up to seven percent for the current financial year to end-June 2017 after producing 257 million tonnes in fiscal 2016, narrowly missing its guidance. ($1 = 6.6874 Chinese yuan renminbi)