* China move fails to restore investors' confidence
* Demand for industrial metals remain shaky
* BHP trims forecast on Chinese steel demand
* BHP sees short-term volatility in iron ore (Updates close prices)
SHANGHAI, Aug 26 (Reuters) - Chinese rebar futures dipped on Wednesday as a gloomy outlook for demand wiped out the industrial material's early gains, despite China cutting its benchmark interest rates to support a stumbling economy.
China's central bank cut interest rates on Tuesday and lowered the amount of reserves banks must hold for the second time in two months, ratcheting up support for a flagging economy and a plunging stock market that has sent shockwaves around the globe. ID:nL3N10W3GV
Benchmark rebar for January delivery on the Shanghai Futures Exchange SRBcv1 gave up early gains, down 0.2 percent to 1,937 yuan($301.92) a tonne by close. It hit a record low of 1,917 yuan on Wednesday since the contract launched in March 2009.
"Chinese steel demand outlook remains dismal this year, while the recovery in output over past few weeks hurt spot prices," said Yu Yang, an analyst with Shenyin & Wanguo Futures in Shanghai.
Steel demand is expected to improve in September and October as construction activities pick up from a summer lull, but Yu still expected prices to stay volatile.
Though China has rolled out a slew of policy measures in the past year to lift its economy, the currency devaluation and a near-collapse in its stock market have sparked fears that the world's second-largest economy is at risk of a hard landing.
Chinese steel consumption and output are expected to fall further this year with prices tumbling to their lowest in about 20 years, hitting demand for raw materials coal and iron ore.
Other metals retreated on Wednesday, with London copper futures resuming declines as demand worries linger. MET/L The Shanghai Composite Index .SSEC ended down 1.3 percent to fresh eight-month lows.
Dalian iron ore futures DCIOcv1 narrowed gains by close, up 0.4 percent to 362.5 yuan.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI stood unchanged at $53.30 a tonne on Tuesday, according to The Steel Index.
Australian miner BHP Billiton (LONDON:BLT) BHP.AX BHP.L posted its worst underlying profit in a decade as a result of plunging iron ore, copper, coal and oil prices. The company sees short-term volatility in the iron ore market. ID:nL5N1104M7 ID:nL4N1105VE
BHP cut its forecast for Chinese steel demand to between 935 million tonnes and 985 million tonnes in the mid-2020s, from more than 1 billion. It also expects China's cooling economic growth to curb demand for some commodities. ID:nL5N1104ME
Rebar and iron ore prices at 0716 GMT
Contract
Last
Change Pct Change
SHFE REBAR JAN6
1937
-4.00
-0.21
DALIAN IRON ORE DCE DCIO JAN6
362.5
+1.50
+0.42
SGX IRON ORE FUTURES SEP
50.08
-0.84
-1.65
THE STEEL INDEX 62 PCT INDEX
53.3
+0.00
+0.00
METAL BULLETIN INDEX
53.45
+0.17
+0.32
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.4233 Chinese yuan renminbi) ($1 = 6.4156 Chinese yuan renminbi)