* Rebar has gained 7.5 pct this week
* Spot iron ore up for seventh week in eight (Updates prices)
By Manolo Serapio Jr
MANILA, Aug 4 (Reuters) - Chinese rebar steel futures jumped 4 percent to their highest in four years on Friday, reflecting firm demand for the building material in the world's top consumer.
Rising steel prices have boosted profit margins among Chinese mills, potentially encouraging them to ramp up output. Prices of raw material iron ore also rose.
As steel margins strengthen further, "steel producers will have more motivation to churn out more steel products to meet demand", Argonaut Securities analyst Helen Lau said in a note this week.
"Against this backdrop, we expect both steel and iron ore prices to rise further."
The most-active rebar on the Shanghai Futures Exchange SRBcv1 closed up 3.6 percent at 3,882 yuan ($578) a tonne, after rising as high as 3,899 yuan, its strongest level since August 2013.
The construction steel product has gained 7.5 percent this week.
Higher Chinese infrastructure spending has spurred demand for construction steel products, tightening the market as Beijing simultaneously clamps down on producers of highly polluting, lower grade rebar. ore on the Dalian Commodity Exchange DCIOcv1 ended 1 percent higher at 548.50 yuan per tonne.
Stronger futures have lifted bids for physical iron ore cargoes, pushing spot prices above $70 a tonne this week for the first time in almost four months.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 0.9 percent to $72.93 a tonne on Thursday, according to Metal Bulletin. The spot benchmark touched $73.70 on Monday, its highest since July 31, gaining 6.1 percent so far this week, its seventh weekly increase in eight.
($1 = 6.7178 Chinese yuan)