* Steel boosted by China’s mega-railway spending plan
* Rebar recovers from six-week low hit in the previous session
* Big iron ore stocks hurt sentiment
BEIJING, Jan 5 (Reuters) - Chinese iron ore and steel rebar prices jumped on Thursday, with iron ore snapping a three-day losing streak, pulled higher by base metals amid renewed hopes that government spending will spur demand from construction and infrastructure.
Non-ferrous metals from copper to aluminium rose after China unveiled late on Wednesday a $115 billion railway construction plan that would require massive amounts of wiring and rail track.
The most-active rebar contract for May delivery on the Shanghai Futures Exchange settled up 2 percent at 2,953 yuan ($429.20) per tonne. It hit a six-week low on Wednesday.
Traders continue to focus on Beijing’s efforts to crack down on outdated capacity in a bid to curb excess output. On Tuesday, the government said it would impose higher power prices on mills using outdated equipment.
Iron ore on the Dalian Commodity Exchange finished up 1.8 percent at 548.5 yuan a tonne.
Domestic stocks CUS-STKTOT-IORE remain at 2 1/2-year highs, rising by 90,000 tonnes last week to almost 111 million tonnes.
“Given stock levels in the country, and supply coming online over the course of 2017, we continue to hold a bearish view towards iron ore,” said Rabobank analysts.
A prolonged bout of toxic smog across the north of the country has renewed concerns about slower manufacturing output, forcing hundreds of factories including steel mills to scale down production or close completely. ($1 = 6.8802 Chinese yuan) (Reporting by Josephine Mason; Editing by Kenneth Maxwell and Sherry Jacob-Phillips)