Recasts throughout to reflect the latest price movement, updates prices on market close

By Amy Lv and Lewis Jackson

BEIJING, Feb 20 (Reuters) - Iron ore futures gained on Thursday as strong steel consumption data from top consumer China boosted sentiment, shifting investor focus to prospects of growing ore demand and spurring a wave of short covering.

The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 ended daytime trade 2.26% higher at 837 yuan ($115.15) a metric ton.

The contract touched the highest since October 8 at 838.5 yuan a ton earlier in the session.

The benchmark March iron ore SZZFH5 on the Singapore Exchange rose 1.65% to $108.45 a ton, as of 0739 GMT, the highest since February 14.

Consumption for rebar, mainly used in the construction sector, surged by 163% from the prior week to 1.69 million tons as of February 20, data from consultancy Mysteel showed.

The drastic increases in prices in the ferrous market were mainly driven by better-than-expected steel consumption, three Chinese analysts and one Singapore-based trader said, requesting anonymity as they're not authorised to speak to media.

That has reignited hopes that demand for steelmaking ingredients will pick up in the coming weeks as steel mills will be encouraged to ramp up output, they added.

Prices wobbled in morning trade due to uncertainties around China implementing more stimulus measures, while authorities left benchmark lending rates unchanged at the monthly fixing on Thursday, signaling a cautious approach to monetary stimulus in order to avoid further pressure on the yuan.

Ore prices gains could give a temporary relief to major producers including Rio Tinto RIO.AX, RIO.L, BHP BHP.AX, Fortescue FMG.AX and Vale VALE3.SA, which reported sharp declines in profit in their latest earnings reports due to falling prices, dragged by China's struggling property market.

Other steelmaking ingredients on the DCE advanced, with coking coal DJMcv1 and coke DCJcv1 up 2.89% and 2.62%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were higher. Rebar SRBcv1 rose 1.24%, hot-rolled coil SHHCcv1 added 1.02%, wire rod SWRcv1 edged up 0.26% and stainless steel SHSScv1 gained 1.15%.

($1 = 7.2687 Chinese yuan)

(Reporting by Amy Lv and Lewis Jackson; Editing by Sherry Jacob-Phillips and Sonia Cheema)

((Amy.Lv@thomsonreuters.com;))