SGX iron ore falls as China stimulus optimism fades

July 8 (Reuters) - Singapore iron ore futures fell on Friday and were set for weekly losses, with renewed optimism about economic stimulus in China quickly fading away and market focus shifting back to COVID-19 restrictions in the world's top steel producer.

Iron ore's front-month August contract on the Singapore Exchange SZZFQ2 was down 1% at $112.45 a tonne, as of 0714 GMT, set to post its fourth weekly loss in five weeks.

On China's Dalian Commodity Exchange, the most-traded September contract for the steelmaking ingredient DCIOcv1 ended daytime trade 0.7% higher at 755.50 yuan a tonne, off the day's high of 782 yuan.

In the spot market, iron ore prices were also set for weekly declines, with the benchmark 62%-grade material bound for China having been assessed by SteelHome consultancy at $114 a tonne on Thursday, down 3% from last week. SH-CCN-IRNOR62

China's Ministry of Finance was considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year to boost infrastructure funding aimed at supporting the struggling domestic economy, Bloomberg News reported.