* Shanghai rebar hit 3-1/2-month top earlier on Wednesday
* Dalian iron ore touched a 2-year high on Tuesday
* Chinese steel prices may keep strength to early 2017 -Clarksons (Updates prices)
By Manolo Serapio Jr
MANILA, Aug 10 (Reuters) - Chinese steel futures pulled back on Wednesday after a fresh spike to their highest since April, and also dragged down raw material iron ore that had rallied to a two-year peak in the previous session.
Firm demand for steel in China, the world's top consumer, had spurred prices of the building material and analysts are optimistic on the outlook for consumption going forward.
Following a visit to two Chinese provinces where he met with several downstream steel users, Clarksons Platou analyst Lee McMillan said "we returned feeling more optimistic on the demand front, as nearly all of the companies we met with expected stronger growth in 2016 than 2015, including in the back half of the year."
"Long story short, while steel oversupply remains a concern given record production levels, we are incrementally more positive on China's near-term demand outlook and and the sustainability of Chinese steel prices into early 2017," McMillan wrote in a report.
The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 closed 0.2 percent lower at 2,587 yuan ($389) a tonne. The contract touched 2,639 yuan earlier on Wednesday, its highest since April 26.
On the Dalian Commodity Exchange, the most-active iron ore DCIOcv1 slid 1.8 percent to 494 yuan a tonne, after hitting 511 yuan on Tuesday, its loftiest since August 2014.
The rally in futures had helped push up bids for spot iron ore cargoes, lifting the benchmark price above $61 a tonne this week, up 28 percent from early June.
But some analysts remained bearish on iron ore, citing pressure from higher global supply ahead as Australian and Brazilian producers ramp up output.
"Short-term, iron ore supply remains mixed with the tightening spot supply again negated by a surplus in implied forward supply," said Hui Heng Tan, analyst at Marex Spectron.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI rose 0.8 percent to $61.40 a tonne on Monday, the highest since May 3, according to The Steel Index (TSI).
TSI did not publish a price assessment on Tuesday due to a public holiday in Singapore.
($1 = 6.6476 Chinese yuan)