Iron ore set for weekly loss as US-China trade war dents demand outlook

BEIJING, April 11 (Reuters) - Iron ore futures prices edged lower on Friday and were poised for a weekly loss, as escalating trade tensions between the United States and China - the world's two largest economies - clouded the outlook on demand.

The most-traded September iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 traded 0.36% lower at 700.5 yuan ($95.73) a metric ton, as of 0156 GMT. It has lost 5.8% so far this week.

The benchmark May iron ore SZZFK5 on the Singapore Exchange fell 1.07% to $96.1 a ton, bringing its weekly decline to 5.6%.

U.S. President Donald Trump hiked tariffs on Chinese imports to 125% soon after Beijing retaliated with lifting tariffs on American goods to 84% from 34% earlier.

Fears lingered whether China will respond in kind with even high tariffs.

Trade tensions showed no signs of easing, ANZ analysts said in a note, warning that a worst-case scenario could tip the global economy into a recession.

That has broadly weighed on sentiment in the metals market despite a short relief after Trump, in a stunning U-turn, announced a 90-day pause on the hefty duties for trading partners that didn't retaliate.

However, resilient near-term demand for iron ore and optimism over potential stimulus measures helped limit loss.

Average daily hot metal output, typically used to gauge iron ore demand, rose for a seventh consecutive week, climbing 0.6% from the previous week to a 17-month high of 2.4 million tons as of April 10, a survey from consultancy Mysteel showed.

Other steelmaking ingredients on the DCE lost further ground, with coking coal DJMcv1 and coke DCJcv1 down 2.67% and 1.62%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar SRBcv1 was little changed, hot-rolled coil SHHCcv1 dipped 0.37%, stainless steel SHSScv1 shed 0.43% while wire rod SWRcv1 added 0.24%.

($1 = 7.3172 Chinese yuan)