* China cuts rate for second time in less than a month
* Spot iron ore prices fall for 2nd day
SINGAPORE, July 6 (Reuters) - Shanghai steel futures fell on Friday, snapping a three-day rise, after China's second rate cut in less than a month raised concern of a sharper economic slowdown that is hurting demand in the world's top steel market.
China's rate cut, announced on Thursday, comes ahead of the release of data next week forecast to show that the world's No. 2 economy grew an annual 7.6 percent in the second quarter, its slowest pace since the 2008/09 global financial crisis.
The most-traded rebar contract for October delivery on the Shanghai Futures Exchange dropped 0.3 percent to 4,080 yuan ($640) a tonne by 0528 GMT. For the week, rebar is down less than half a percent.
"People are worried that the GDP data next week will be much lower than expected," said an iron ore trader in Shanghai. "Also a rate cut will push up demand, but the effect will not be felt quickly."
Rebar is tracking losses across commodities and equities, as investors moved warily ahead of the U.S. nonfarm payrolls data due later in the day.
Steel's weakness is also likely to sustain the decline in spot iron ore prices. Price offers for imported cargoes in China were steady for a second day on Friday, traders said.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI slipped 0.2 percent to $134.80 a tonne on Thursday, its second straight day of decline, based on data from Steel Index.
It was the fifth time that prices fell in six days as mills keep modest inventories of the raw material given sluggish steel demand.
Steel prices in China are down more than 2 percent this year, reflecting weak demand that has prompted some steel mills to curb output to cut losses that reached about 1 billion yuan in the first quarter.
"The market's not encouraging. Our clients only want to buy at very low prices at the moment," said another trader in Shanghai, whose company has half a million tonnes of iron ore in hand and is waiting for prices to recover before selling cargoes.
Miner BHP Billiton is selling 80,000 tonnes of 62.7-percent grade Australian Newman iron ore fines and 90,000 tonnes of 57.7-percent grade Yandi fines at a tender on Friday.
Some traders expect prices at the tender to fall, as have most cargoes this week.
A resale of Newman iron ore fines was done at $138.10 a tonne on Thursday, down from the last done deal for the same grade of $140.50 at the end of June, the second Shanghai trader said.
Brazil's Vale sold 175,000 tonnes of 65-percent grade cargo at $147.16 per tonne, little changed from a previous sale of $147.05, he said.
Shanghai rebar futures and iron ore indexes at 0528 GMT
Contract Last Change Pct Change
SHFE REBAR OCT2 4080 -14.00 -0.34
PLATTS 62 PCT INDEX 136.5 -0.50 -0.36
THE STEEL INDEX 62 PCT INDEX 134.8 -0.30 -0.22
METAL BULLETIN INDEX 136.12 +0.13 +0.10
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3559 Chinese yuan)