* Weekly gain for rebar, spot iron ore biggest since April
* Iron ore stocks at China ports at highest since Dec 2014
By Manolo Serapio Jr
MANILA, July 1 (Reuters) - Shanghai steel futures extended recent gains to hit the highest in nearly two months on Friday, supported by low inventory levels even as the outlook for demand for the rest of the year remained weak.
Gains in Chinese futures pushed spot iron ore prices higher this week, rising to a six-week high above $54 a tonne on Thursday.
"In our view, speculative interest behind the recent paper rally was supported by low steel inventory levels," Goldman Sachs (NYSE:GS) said in a report.
"However, long term fundamentals remain bearish," said the bank's analysts who estimated a 1.3 percent annual decline in Chinese steel consumption in May and a sequential fall in the second half of the year.
The most-traded rebar on the Shanghai Futures Exchange SRBcv1 closed up 2.4 percent at 2,349 yuan ($353) a tonne, after earlier peaking at 2,374 yuan, its strongest since May 5.
The steel product used in construction gained almost 10 percent for the week, the most since April.
In the week ended June 24, Chinese steel stockpiles dropped for a fifth week, by 1.4 percent from the prior week to 8.84 million tonnes, data from Mysteel consultancy showed.
News last weekend of the restructuring plans by leading Chinese steelmakers Baosteel Group 600019.SS and Wuhan Iron and Steel Group 600005.SS also spurred prices higher this week on hopes that a consolidation in China's vast steel sector would improve efficiency.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI climbed 1.5 percent to $54.20 a tonne on Thursday, according to The Steel Index.
That was the highest for the spot benchmark since May 20 and puts its weekly gain so far to 5.5 percent, also the biggest since April.
Despite the gains, ANZ Bank said "physical buyers were few and far between, suggesting this latest rally is reaching its limit."
On the Dalian Commodity Exchange on Friday, the most-traded iron ore contract DCIOcv1 slipped 0.7 percent to 421 yuan a tonne.
"There are a lot of stocks arriving at the ports, supply is increasing but no change in demand, so there will be more accumulation of stocks," said Wang Ying, analyst at Everbright Futures.
Inventory of imported iron ore at major Chinese ports stood at 102.55 million tonnes on Friday, the most since December 2014, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV
($1 = 6.6578 Chinese yuan)