* Benchmark iron ore index rises for 4th day, may peak soon
* BHP sells cargoes at higher prices, Vale sets tender
SINGAPORE, June 14 (Reuters) - Prices for spot Australian iron ore cargoes rose on Thursday, backed by demand from main buyer China, although the uptrend in prices of the raw material may soon be cut short unless the steel market bounces back convincingly.
A drop in spot iron ore prices to two-week lows last week revived buying interest among Chinese mills, with traders also beginning to take positions on expectations of some more upside for prices as Beijing moves to boost its slowing economy.
Price offers for Australian iron ore in China rose by a dollar per tonne on Thursday, according to industry consultancy Umetal, after miners sold shipments at higher prices on Wednesday.
"Some traders are starting to take positions because they feel the market can go higher, given that the Chinese government has been supporting the economy and speeding up approvals of infrastructure projects," said a Shanghai-based iron ore trader.
China could implement two more interest rate cuts and another three reserve requirement ratio cuts in the remainder of the year and the country's economy should stabilise by the end of the second quarter, said Cao Wenlian, a former deputy director of the finance department at the National Development and Reform Commission.
Australian miners sold cargoes at higher prices on Wednesday, with BHP Billiton selling 90,000 tonnes of 62.7-percent Australian Newman iron ore fines at $138.10 a tonne, up from a previous sale of $135.50, traders said.
BHP also sold 80,000 tonnes of 57.7-percent grade Australian Yandi fines at $124.90 per tonne, about a dollar higher than last week, traders said.
A 90,000-tonne Australian cargo of Pilbara iron ore fines was sold at $136 per tonne via the China Beijing International Mining Exchange platform, according to the exchange. That was a dollar more than a prior transaction, traders said.
Top iron ore producer Vale is selling 172,000 tonnes of 64.7-percent grade Carajas fines at a tender that closes later on Thursday.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI rose half a percent to $133.70 a tonne on Wednesday, according to Steel Index, its fourth straight day of gains.
"Prices should firm some more, but they're going to peak soon," said a trader in Hong Kong.
Without support from steel prices, further gains in iron ore prices could soon turn off Chinese buyers who took the opportunity to rebuild iron ore stockpiles when the benchmark ore fell to a two-week trough of $130.60 last week.
The price of steel billet in China's Tangshan, in the top steel producing Hebei province, has steadied around 3,600 yuan ($570) per tonne in recent days, reflecting slow demand.
The most traded rebar contract for October delivery on the Shanghai Futures Exchange closed up a modest 0.2 percent at 4,110 yuan a tonne.
"Overall, the steel industry is still not that encouraging. The market direction is still unclear," said the Shanghai trader.
Underlining market concern that demand may not pick up soon, China's Baoshan Iron and Steel, the world's No. 3 steelmaker, earlier this week said it would cut prices of its main products for July, its first reduction since last December.
Shanghai rebar futures and iron ore indexes at 0707 GMT
Contract Last Change Pct Change
SHFE REBAR OCT2 4110 +8.00 +0.20
PLATTS 62 PCT INDEX 135.75 +0.25 +0.18
THE STEEL INDEX 62 PCT INDEX 133.7 +0.60 +0.45
METAL BULLETIN INDEX 135.26 +0.00 +0.00
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3691 Chinese yuan)