Iron ore struggles for direction as markets weigh China's COVID mandates

June 29 (Reuters) - Dalian iron ore futures extended gains to a fourth session on Wednesday, although prices in Singapore retreated after a two-day rally, indicating tempered optimism about notable changes to China's COVID-19 mandates.

The steelmaking ingredient's front-month July contract on the Singapore Exchange SZZFN2 dropped as much as 1.4% to $122.50 a tonne.

SGX iron ore hit its highest since June 17 on Tuesday at $125.10 a tonne, while benchmark 62%-grade iron ore's spot price climbed $3 to $124, based on SteelHome consultancy data, as China eased quarantine requirements for international arrivals. SH-CCN-IRNOR62.

COVID-19 testing mandates have also been scrapped or relaxed in several Chinese cities, as the world's biggest steel producer and iron ore importer emerged from its worst outbreaks.

On China's Dalian Commodity Exchange, the most-traded September iron ore contract ended morning trade 1.9% higher at 800.50 yuan ($119.41) a tonne, after hitting the highest since June 20 at 819 yuan earlier in the session.