* Iron ore dips after hitting 3-wk high
* Steel spot price gains start to ease (Updates close prices, adds new comment)
SHANGHAI, July 30 (Reuters) - Chinese iron ore futures fell back on Thursday after touching the highest in more than three weeks as slow demand in the world's top producer undercut its rally.
Tougher anti-pollution measures have prompted some Chinese mills to curb output, spurring a recovery in spot steel prices, but subdued demand has failed to sustain the strong gains.
The most active January iron ore contract on the Dalian Commodity Exchange DCIOcv1 fell 0.6 percent to close at 364 yuan ($58.63) a tonne, after earlier hitting 374.5 yuan, its highest since July 6.
"Some mills and traders have started to cut prices a little as prices rose too fast and it needs to take a break," said a steel trader in southern China.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose a fourth day on Wednesday, hitting $55.30 a tonne, its highest since July 2, according to the Steel Index.
"The increase in price was supported by the speculation that steel mills are buying iron ore from ports, against the seasonal trend. Steel prices have also stabilised and firmed modestly in recent weeks - supporting sentiment in the iron ore market," ANZ said in a research note.
In the first half of the year, China's total steel output dropped 1.3 percent from a year ago to 409.97 million tonnes, data from the statistics bureau shows. ID:nL3N0ZP3QU
Spot rebar has gained an accumulated 140 yuan a tonne from a record low of 1,890 yuan on July 17, according to industry website Mysteel data.
The most traded January rebar contract on the Shanghai Futures Exchange SRBcv1 dipped 0.6 percent to 2,085 yuan a tonne by close.
Rebar and iron ore prices at 0722 GMT
Contract
Last
Change Pct Change
SHFE REBAR JAN6
2085
-13.00
-0.62
DALIAN IRON ORE DCE DCIO JAN6
364
-2.00
-0.55
SGX IRON ORE FUTURES SEP
50
-1.33
-2.59
THE STEEL INDEX 62 PCT INDEX
55.3
+3.10
+5.94
METAL BULLETIN INDEX
55.89
+2.44
+4.57
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2087 Chinese yuan)