* Dalian iron ore climbs nearly 5 pct to hit upside limit
* Shanghai rebar jumps over 4 pct to highest since September (Updates with spot iron ore)
By Manolo Serapio Jr
MANILA, Feb 22 (Reuters) - Spot iron ore jumped 7 percent to over $50 a tonne on Monday while prices on China's Dalian exchange hit their upside limit as Shanghai steel prices surged to their highest since September.
Iron ore futures in Singapore rose more than 5 percent as both iron ore and steel prices extended last week's rally on signs of a pick-up in demand.
"Low steel inventory, seasonal demand rebound after Chinese New Year and increasing utilization rate at blast furnaces have resulted in a rebound in steel and iron ore prices," Argonaut Securities analyst Helen Lau said in a note.
Lau said steel margins among Chinese producers have also improved since they were using the lower-priced iron ore they bought a month ago.
Spot iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI rose 7 percent to $50.30 a tonne, the highest since Oct. 27, based on data compiled by The Steel Index.
The spot benchmark increased nearly 9 percent last week, its biggest such gain since last April.
The most-traded May iron ore on the Dalian Commodity Exchange DCIOcv1 rose 4.9 percent to close at its exchange-set ceiling of 365.50 yuan ($56.08) a tonne, its strongest since Sept. 17.
On the Singapore Exchange, April iron ore SZZFJ6 was up 5.3 percent at $47.12 a tonne.
Reinforcing bar for May delivery on the Shanghai Futures Exchange SRBcv1 closed up 4.3 percent at 1,962 yuan a tonne after rising as far as 1,968 yuan, a level last seen on Sept. 11.
Construction activity typically picks up in China shortly after the Lunar New Year break, and traders anticipate demand for construction steel products to gain further next month.
But excess supply could eventually overwhelm demand, analysts say.
"We believe this rebound in steel prices and iron ore will be short-lived in view of oversupply," said Lau.
Rebar and iron ore prices
Contract
Last
Change Pct Change SHFE REBAR MAY6
1962
+81.00
+4.31 DALIAN IRON ORE DCE DCIO MAY6
365.5
+17.00
+4.88 SGX IRON ORE FUTURES APR
47.12
+2.36
+5.27 THE STEEL INDEX 62 PCT INDEX
50.30
+3.30
+7.02 METAL BULLETIN INDEX
48.52
+1.38
+2.93
Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne ($1 = 6.5174 Chinese yuan)