UPDATE 1-China's steel, iron ore futures rise after rebar stocks drop

* Market sentiment briefly lifted by declining inventory data

* China’s steel demand to be leaner in July - analyst (Updates prices)

BEIJING/MANILA, June 28 (Reuters) - Shanghai rebar steel futures rose on Thursday, moving away from a nearly one-month low, following a decline in stockpiles of the building material that eased concerns about weaker seasonal demand in top steel consumer China.

Weekly stocks of construction steel product rebar held by Chinese traders dropped 2.4 percent after last week’s increase, data compiled by, a Chinese e-commerce steel trading platform, showed.

“The market feared that stockpiles will continue to grow this week, since that would be a clear signal of weak demand. Now stocks went down, which means the breaking point for demand has not come yet,” said Sun Feng, senior analyst at Orient Futures.

However, he warned that the latest data did not cover traders across the country.

“The overnight data may only temporarily lift market sentiment. People are still waiting to see the more representative figure from Mysteel consultancy,” Sun said.

Data from Mysteel consultancy last week showed stocks of steel products rose 110,000 tonnes to 10.1 million tonnes following 14 consecutive weeks of declines. Mysteel is expected to release its latest figures later on Thursday.

The most-actively traded October rebar on the Shanghai Futures Exchange closed 1.5 percent higher at 3,744 yuan ($566) a tonne. Rebar touched 3,663 yuan on Tuesday, its lowest since May 31, and stayed near that level on Wednesday.

Spot steel prices dipped 0.2 percent to 4,311.91 yuan a tonne on Wednesday, Mysteel data showed.

“Demand for steel could become leaner in July when construction works typically halt due to a heatwave across the country,” said Sun at Orient Futures.

The China Meteorological Administration expects the eastern provinces of Jiangsu, Anhui, Henan and Hubei to face heavy rains in the next three days, while the northern regions of Hebei and Inner Mongolia have issued high-temperature alerts.

Prices of steelmaking raw materials iron ore and coke rose alongside steel, while coking coal was largely steady.

The most-traded iron ore contract for September delivery on the Dalian Commodity Exchange advanced 0.9 percent to 467.50 yuan a tonne.

Coke rose 1.2 percent to 2,059.50 yuan a tonne and coking coal slipped 0.1 percent to 1,183.50 yuan.

Spot iron ore for delivery to China's Qingdao port .IO62-CNO=MB dropped 3 percent to $64.60 a tonne on Wednesday, the weakest level since May 28, according to Metal Bulletin.

$1 = 6.6200 Chinese yuan Reporting by Muyu Xu in Beijing and Manolo Serapio Jr in Manila; Editing by Richard Pullin and Sherry Jacob-Phillips