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UPDATE 1-Shanghai steel falls with iron ore amid China property curbs

* Shanghai rebar, Dalian iron ore drop from two-week highs

* Nanjing latest second-tier city to restrict home purchases (Updates prices)

MANILA, Sept 27 (Reuters) - Chinese steel futures slid more than 2 percent on Tuesday and along with iron ore retreated from recent two-week highs amid concerns Beijing’s efforts to cool surging home prices would slow demand for steel.

China’s eastern city of Nanjing said on Sunday it would restrict home purchases, the latest second-tier city to do so as the government tries to rein in home prices.

The average new home price in 70 major Chinese cities climbed an annual 9.2 percent in August, up from 7.9 percent in July, government data showed last week.

“The real estate curbs will not encourage developers to build new houses and it will eventually affect demand for steel,” said a Shanghai-based iron ore trader.

The most-traded rebar on the Shanghai Futures Exchange closed down 2.2 percent at 2,273 yuan ($341) a tonne. The construction steel product peaked at 2,353 yuan on Monday, its strongest since Sept. 12.

Rebar has fallen more than 6 percent so far in September, typically a brisk period for construction activity in China following the summer lull. But some traders say apart from the property curbs, rains in parts of the country have limited construction projects.

There was also limited appetite for steelmaking raw material iron ore, with the most-traded contract on the Dalian Commodity Exchange slipping 1.7 percent to 406 yuan a tonne. It touched a two-week high of 420 yuan on Sept. 22.

There is little appetite for mills to replenish iron ore stocks ahead of China’s week-long National Day holiday that starts on Oct. 3, said the Shanghai trader.

“I think most mills have enough supply (of iron ore) or they don’t have enough problem to secure supply for their immediate demand,” he said.

Iron ore for delivery to China's Tianjin port .IO62-CNI=SI slipped 0.2 percent to $56.40 a tonne on Monday, according to The Steel Index. ($1 = 6.6676 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar and Biju Dwarakanath)

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