* Iron ore prices seen rebounding as Chinese restock
* China slowdown may get worse and last longer-World Bank
By Manolo Serapio Jr
SINGAPORE, Oct 8 (Reuters) - Shanghai rebar steel futures climbed nearly 2 percent on Monday to the highest in almost two months as Chinese traders returned from a week-long break armed with hopes demand in the world's top consumer will pick up as the economy stabilises.
Steel's rise suggests prices of raw material iron ore are likely to rebound this week, with Chinese mills also expected to return to the spot market to replenish stocks.
The most active rebar contract for January delivery on the Shanghai Futures Exchange
hit a session high of 3,668 yuan ($580) a tonne, its loftiest since Aug. 17.
Rebar outperformed other China-traded commodities, including rubber and base metals, which drifted lower as a poor global economy cast doubts on the outlook for raw material demand.
The World Bank cut its economic growth forecasts for the East Asia and Pacific region and said there was a risk the slowdown in China, the world's No. 2 economy, could get worse and last longer than expected.
But a private sector survey showed China's services sector activity rebounded in September after hitting a one-year low in August.
Rebar is taking its cue from gains in spot steel prices in China during last week's National Day break as traders look to a bounce in demand.
The price of steel billet in China's key Tangshan area had increased to 3,340 yuan per tonne last week from 3,150 yuan before the holiday, said a Shanghai-based trader.
"The steel market had picked up during the holidays. People are looking at an improvement in demand so we have this upbeat sentiment at the moment," the trader said.
Price offers for iron ore cargoes from top exporter Australia rose between $1-$3 per tonne on Monday, according to Chinese industry consultancy Umetal.
"People are pushing up prices hoping the market will be good. Steel prices are up and some mills are bound to restock after the long holiday," said another trader in Shanghai.
"It will be a good start for the iron ore market this week, but whether the gains will be sustained I'm not sure."
Benchmark iron ore with 62 percent grade iron content
steadied at $104.20 a tonne for all of last week, but the second Shanghai trader said there's a chance the price could hit $110 today.
A cargo of Australian 57.7-percent grade Yandi iron ore fines is on offer at a tender closing later on Monday, a Hong Kong trader said. The 210,000-tonne shipment was offered at the GlobalOre platform on Friday at $106 a tonne, with the best bid at $101, he said.
The Yandi grade was last sold at $99.50 per tonne before the Chinese holiday, traders said.
Shanghai rebar futures and iron ore indexes at 0350 GMT
Contract Last Change Pct Change SHFE REBAR JAN3 3651 +54.00 +1.50 PLATTS 62 PCT INDEX 107 +0.00 +0.00 THE STEEL INDEX 62 PCT INDEX 104.2 +0.00 +0.00 METAL BULLETIN INDEX 106.46 +0.00 +0.00 Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2849 Chinese yuan) (Editing by Miral Fahmy)
Keywords: MARKETS IRONORE/