Iron ore rally loses momentum as China steel curbs weigh

Aug 2 (Reuters) - Dalian and Singapore iron ore futures swung between losses and gains on Tuesday after touching four-week peaks in the previous session, as prospects of further steel production cuts in China kept traders cautious.

Rebounding steel margins in China, the world's biggest steel producer, lent some support to the steelmaking ingredient, however.

The most-traded iron ore, for September delivery, on China's Dalian Commodity Exchange DCIOcv1 ended volatile morning trade up 0.3% at 798 yuan ($117.88) a tonne. It hit its highest since June 30 at 817.50 yuan in the previous session.

"The recovery in mills' margins has spurred hopes that (raising) production capacity may resume more quickly than expected," said Daniel Hynes, a senior commodity strategist at ANZ.

Improved profitability has reportedly prompted Chinese mills to restart some blast furnaces, among dozens of such production facilities idled as weak demand in recent weeks had squeezed margins.