* Shanghai rebar, Dalian iron ore climb 2.6 pct, but off day highs
* Iron ore stocks at China's ports at highest since 2004
* Iron ore traders rush to sell cargoes, buyers hold back -trader
By Manolo Serapio Jr
MANILA, March 29 (Reuters) - Steel and iron ore futures in China pulled away on Wednesday from multi-week lows that both commodities touched this week, but traders predict further price declines as supply outpaces demand in the word's top market.
The two have already fallen back from the day's peaks though they remain well above the lows hit on Monday.
The most-active rebar on the Shanghai Futures Exchange was up 2.6 percent at 3,151 yuan ($457) a tonne by midday break, after rising as far as 3,167 yuan earlier.
The construction steel product hit 3,003 yuan on Monday, its weakest since Feb. 10.
Iron ore for September delivery on the Dalian Commodity Exchange was up 2.6 percent at 566 yuan per tonne, off a session high of 571.50 yuan. The contract on Monday touched its lowest since Jan. 10 at 541 yuan.
Prospective buyers of iron ore in China are holding back following the recent price slide that took spot prices of the steelmaking raw material to a seven-week trough of $81.57 a tonne on Monday.
"Every time the price starts to drop, buying interest would shrink," said a Shanghai-based iron ore trader.
There's plenty of cargoes being offered in the market as sellers rush to liquidate their shipments before prices drop further, he said.
Stockpiles of imported iron ore at China's ports continued to rise last week, reaching 132.45 million tonnes as of March 24, according to SteelHome consultancy. SH-TOT-IRONINV
That is the highest level of port inventory since SteelHome began tracking the data in 2004.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB gained 0.5 percent to $82.01 a tonne on Tuesday, after a two-day drop, according to Metal Bulletin.
The spot benchmark touched a 30-month peak of $94.86 in February, but has lost 10 percent so far in March and is on track for its first monthly drop in six.
Buying interest for steel products among traders has similarly eased, the Shanghai trader said.
"In the last few weeks a lot of traders were buying steel and hoping the price would go up. Now they're taking losses as the price drops and the buying interest is gone." ($1 = 6.8902 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)