* Shanghai rebar fall follows four-day spike
* Dalian iron ore slides nearly 3 pct
* Iron ore at China's ports at highest level since 2004 (Adds comment from Commonwealth Bank of Australia, updates prices)
By Muyu Xu and Manolo Serapio Jr
BEIJING/MANILA, June 13 (Reuters) - China's rebar steel futures fell more than 3 percent on Tuesday in their sharpest single-day drop since early May amid concern that a slowing property market may dent steel demand in the world's top consumer.
China has been restricting real estate purchases across its cities to keep speculation in check and curb soaring prices, with banks also tightening loans to the sector.
"Trading volume and average bids in the property market have been dampened which signals that Beijing's policy to regulate the real estate sector is working," said Zou Mingdong, Shanghai-based steel manager at Zhongcai Merchants Investment Group.
But the city of Shanghai appeared to alter a property policy on Monday following protests over the weekend.
The most-active rebar contract on the Shanghai Futures Exchange closed down 3.1 percent at 2,935 yuan ($432) a tonne. That was the steepest daily drop for the construction steel product since May 4.
Steel demand is also weak during summer in China, when hot weather in the northern parts of the country and frequent rainfall elsewhere limit construction activity.
"Steel prices should fall from current levels by yearend, as the supply additions prove too much for actual demand," Commonwealth Bank of Australia said in a note.
As steel prices slid, so did iron ore, with stocks of the raw material still plentiful in China.
The most-traded iron ore on Dalian Commodity Exchange fell 2.9 percent to 418.50 yuan per tonne.
Stockpiles of imported iron ore at China's ports reached 140.05 million tonnes on Friday, the most since at least 2004, according to data tracked by SteelHome consultancy. SH-TOT-IRONINV
Port inventory has risen more than 26 percent this year.
"High iron ore inventory will become a regular situation," said Zou.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 0.9 percent to $54.87 a tonne on Monday, according to Metal Bulletin, tracking gains in Chinese iron ore futures in the prior session. ($1 = 6.7971 Chinese yuan) (Reporting by Manolo Serapio Jr. in Manila and Muyu Xu in Beijing; Editing by Joseph Radford)