UPDATE 1-Dalian iron ore holds near 7-week high after firm GDP
* China economy grew 7.5 pct in Q2 vs 7.4 pct forecast
* China June steel output hit record high 2.31 mln T/day
* Rio Tinto Q2 output up, Fortescue sees more China mines closing (Updates prices)
By Manolo Serapio Jr
SINGAPORE, July 16 (Reuters) - China's iron ore futures steadied near seven-week highs on Wednesday after data showed the Chinese economy grew slightly faster than expected in the second quarter.
Iron ore prices, both futures and spot, rose to their highest level since late May on Tuesday ahead of the data on expectations that China would continue with stimulus measures, including infrastructure spending, to aid growth.
The world's No. 2 economy expanded 7.5 percent in April-June, quicker than the 7.4 percent that economists had predicted, although they said further state support is likely needed to meet the government's growth target this year.
Brent crude gained slightly, while copper and other industrial commodities along with equities barely moved after the data was released.
Iron ore for September delivery on the Dalian Commodity Exchange was nearly flat at 717 yuan ($120) a tonne at the close, after rising to 725 yuan in the previous session, a level last seen on May 27.
The most-active rebar contract for January delivery on the Shanghai Futures Exchange slipped 0.4 percent to end at 3,132 yuan per tonne. The contract peaked at 3,155 yuan on Tuesday, also its highest since late May.
Firmer steel prices have helped spot iron ore prices move closer to $100 a tonne this week, a level it breached in mid-May, as traders raised their bets on a market recovery.
"The question now is whether steel mills will follow suit. But after recent restocking and port inventory still high, I don't see that happening," said an iron ore trader in Shanghai.
Stockpiles of imported iron ore at Chinese ports stood near a record high at 113.4 million tonnes last week SH-TOT-IRONINV.
Mills with short-term supply needs have been "buying regularly" from iron ore stocks sitting at the ports that are cheaper than fresh seaborne cargoes, the Shanghai trader said.
Benchmark 62 percent grade iron ore for immediate delivery to China .IO62-CNI=SI gained 10 cents to $98 a tonne on Tuesday, the highest since May 27, according to data compiled by Steel Index.
China's daily crude steel output rose 1.8 percent in June to hit a record high 2.31 million tonnes, the government said.
While follow through buying interest could lift the price to $100, analysts at Australia and New Zealand Banking Group said "the market remains divided on whether that level will be the near-term ceiling."
"Prices are unlikely to fall in the short-term as demand is buoyed by sufficient margins for steel mills, lower feedstock costs, and low inventory levels at mills," they said in a note.
Iron ore prices have dropped more than a quarter this year, shutting out higher cost producers including those in China. Fortescue Metals Group Ltd, Australia's third-biggest iron ore producer, said the closure of more Chinese iron ore mines is inevitable, helping the market to rebalance.
World no. 2 iron ore miner Rio Tinto said it was on track to produce 295 million tonnes of the steel-making material in 2014, up from 266 million tonnes last year. Rio said second-quarter output rose 11 percent to 73.1 million tonnes.
Prices at 0708 GMT Contract Last Change Pct Change SHFE REBAR JAN5 3132 -12.00 -0.38 DALIAN IRON ORE DCE DCIO SEP4 717 -1.00 -0.14 SGX IRON ORE FUTURES AUG 98.72 +0.03 +0.03 THE STEEL INDEX 62 PCT INDEX 98 +0.10 +0.10 METAL BULLETIN INDEX 97.89 +0.22 +0.23 Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.2061 Chinese yuan) (Editing by Muralikumar Anantharaman and Subhranshu Sahu)