* Shanghai steel also falls to 1-month low, down over 2 pct
* Iron ore and steel seen recovering in Sept as peak season starts (Updates prices)
By Manolo Serapio Jr
MANILA, Sept 1 (Reuters) - Chinese iron ore futures fell to one-month lows on Thursday, before ending slightly firmer, amid closures of steel mills around the eastern city of Hangzhou to improve air quality ahead of this weekend's G20 summit.
Buying appetite for the steelmaking raw material was limited, keeping the spot price below $60 a tonne, although a seasonal peak period for Chinese steel demand in September and October along with a mending economy could spur a recovery.
Many small Chinese mills surrounding Hangzhou have been ordered to suspend production to clear the skies ahead of the Sept. 4-5 meeting of world leaders.
"Buying activity for both steel and raw materials had been limited," said Wang Di, analyst at CRU consultancy in Beijing.
The most-active January iron ore on the Dalian Commodity Exchange DCIOcv1 fell as as far as 408 yuan ($61) a tonne, its lowest since Aug. 1, before closing 0.5 percent higher at 417.50 yuan.
A recovery in steel prices from session lows helped the raw material regain some lost ground.
On the Shanghai Futures Exchange, construction steel product rebar SRBcv1 ended 0.8 percent lower at 2,402 yuan a tonne, after touching a one-month trough of 2,362 yuan earlier.
Weaker futures had weakened bids for physical cargoes in China, traders said.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI was unchanged at $59 a tonne on Wednesday, according to The Steel Index (TSI). It has fallen almost 5 percent from a 3-1/2-month high reached on Aug. 16.
"Buyers were hesitant, waiting for a clearer direction. Falling futures and spot steel market prices at a time of stable raw material prices added to their reticence," said TSI, which assesses physical iron ore deals in China.
The spot benchmark ended August with a modest 0.3 percent gain, but was still up nearly 38 percent for the year to be among the best performing commodities.
Iron ore could resume its upturn after the G20 summit "given that September is usually a high season for steel demand," said CRU's Wang. "The economy also remains firm."
Activity in China's manufacturing sector picked up unexpectedly in August but gains were modest, an official survey showed on Thursday, suggesting the world's second-largest economy is steadying but still sluggish. = 6.6800 Chinese yuan)