* Shanghai rebar, Dalian iron ore rebound from multi-week lows
* Chinese cities announce new restrictions on property purchases
* China economy may support markets against further declines (Recasts as prices rebound)
By Manolo Serapio Jr
MANILA, Oct 10 (Reuters) - Iron ore and steel futures in China bounced back from multi-week lows on Monday amid hopes that government efforts to curb property purchases may only have limited impact in cooling overall steel demand amid a mending economy.
A number of Chinese cities including Beijing, Guangzhou, Shenzhen, Suzhou, Chengdu and Wuhan - in a bid to combat rising property prices - announced new restrictions on purchases and mortgage down payments during China's National Day holiday in the beginning of October. central bank Governor Zhou Xiaochuan said the government is "paying close attention" to rising property values in some cities and will take appropriate measures to promote the real estate market's "healthy development". measures on the property market "may in a sense affect sentiment but we don't really see a big crash in new (housing) starts because China's underlying economic condition is improving," said Helen Lau, an analyst with Argonaut Securities in Hong Kong.
The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 closed up 0.3 percent at 2,270 yuan ($340) a tonne after falling as far as 2,209 yuan, the lowest since Sept. 19.
On the Dalian Commodity Exchange, iron ore DCIOcv1 jumped 1.2 percent to end at 412.50 yuan per tonne. The steelmaking raw material touched 398 yuan earlier, a level last seen on Sept. 22.
Activity in China's manufacturing sector expanded again in September, an official survey showed on Oct. 1, which may indicate that recent positive momentum can be sustained. long as these restrictions are applied to only tier-1 and tier-2 cities we may still see construction volumes lift in tier-3 cities and below," Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The lower tier cities accounted for 80-90 percent of new construction volumes during China's commodity boom and could still push China's commodity demand higher, said Dhar.
Activity in the physical iron ore markets may pick up this week after slow trading during China's Oct. 3-7 holiday.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI stood at $54.40 a tonne on Friday, the lowest since July 1 and down 1.5 percent for the past week, according to The Steel Index. ($1 = 6.6685 Chinese yuan)