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* Dalian iron ore up 0.7 pct, after rising as much as 3.5 pct
* Demand for high-grade iron ore in China still firm -trader
By Manolo Serapio Jr
MANILA, March 16 (Reuters) - Shanghai rebar steel futures slipped more than 1 percent on Thursday after a rapid rise that pushed them to their highest in more than three years in the previous session.
Hopes of stronger infrastructure spending and property sales in China helped steel prices surge this week, but volatility is also high. As steel futures pulled back on Thursday they undermined iron ore's early jump to a three-week top.
"The market is not very stable and everybody wants to wait and see how it will go next," said a Beijing-based trader of iron ore.
The most-active rebar on the Shanghai Futures Exchange was down 1.1 percent at 3,590 yuan ($521) a tonne after hitting 3,677 yuan earlier. On Wednesday the construction steel product peaked at 3,692 yuan, its highest since February 2014.
Iron ore on the Dalian Commodity Exchange was up 0.7 percent at 715 yuan a tonne, off a session high of 735 yuan, its highest since Feb. 21.
Physical demand in China for high-grade iron ore from top suppliers Australia and Brazil remains firm, said the Beijing-based trader, but not so for lower grade material.
"Because steel mills' profits are quite okay, they prefer higher-grade products," she said. "And now some domestic concentrate is coming out so that's why low-grade cargoes are not popular."
The spike in spot iron ore to a 30-month high above $90 a tonne in February is encouraging Chinese miners shuttered years ago to resume operations, possibly tightening the market for marginal foreign suppliers to China.
Traders say the rising mountain of imported iron ore at China's ports is comprised mostly of lower grade material.
Port inventory stood at 130 million tonnes on March 10, down 50,000 tonnes from the previous week, when they were at their highest since at least 2004, when SteelHome consultancy began tracking the data. SH-TOT-IRONINV
Amid stronger futures this week, iron ore for delivery to China's Qingdao port .IO62-CNO=MB climbed 3.2 percent to $90.93 a tonne on Wednesday, the highest since March 3, according to Metal Bulletin.
$1 = 6.8941 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Tom Hogue