* China home prices show signs of fatigue in July
* Steel production cuts stirring iron ore demand worries -CBA (Updates prices)
By Manolo Serapio Jr
MANILA, Aug 18 (Reuters) - Chinese steel futures fell on Thursday, retreating further after this week's rally to a near four-month high spurred by Beijing's efforts to curb excess capacity.
Those efforts, including a fresh round of production cuts in the major steel producing city of Tangshan amid tighter environmental rules, should keep steel prices elevated, traders said.
"The production cuts will affect supply of steel to the market, so prices will have good support," said a Shanghai-based trader.
The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed 0.9 percent lower at 2,549 yuan ($385) a tonne. The construction steel product touched a high of 2,687 yuan on Tuesday, the loftiest since April 25.
Signs that China's housing market cooled in July after gains in the first half of the year also dampened market sentiment. iron ore on the Dalian Commodity Exchange DCIOcv1 closed nearly flat at 437 yuan a tonne.
Weaker futures on Wednesday dragged down spot iron ore prices, with material for delivery to China's Tianjin port .IO62-CNI=SI slipping 1.1 percent to $61.10 a tonne, according to The Steel Index.
"Iron ore demand concerns are growing after Chinese authorities ordered steel mills in the Yangtze River region to cut crude steel and sintering output by 50 percent during the G20 summit from August 23 to September 9," Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
The measures are meant to improve air quality during the G20 summit on Sept. 4-5 in China's eastern city of Hangzhou. ($1 = 6.6265 Chinese yuan)