Aug 7 (Reuters) -ICE cotton futures rose more than 1% on Monday as upbeat sentiment across grains and broader equity markets spilled over to the natural fiber, with the focus on monthly supply and demand report later this week.

* The most-active December cotton contract CTZ3 rose 1.53 cents, or about 1.8%, to 85.82 cents per lb by 12:32 p.m. EDT (1632 GMT). It traded in a range of 84.27 and 85.9 cents a lb.

* "Market is bouncing higher a little bit following Friday's negative settlement," said Bailey Thomen, risk management consultant at StoneX Group.

* Cotton is "finding some support and resistance between the nearby moving averages," and is "comfortable trading sideways in this mid to lower $0.80 range, but there's still a little bit of a bullish inclination just based on the current trend line."

* Chicago wheat rose around 2% as global supply concerns intensified, spurred by fears of an escalation of attacks on Black Sea shipping after a Ukrainian strike on a Russian tanker. GRA/

* Wall Street climbed higher following a choppy week, with investors looking ahead to a highly awaited U.S. inflation report due later in the week that could test the market's sharp recovery this year. .N

* Limiting further gains for U.S. cotton, the dollar index .DXY rose about 0.1%, weighing on demand especially among overseas investors. USD/

* Focus this week will be on the U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates (WASDE) report due on Friday.

Reporting by Harshit Verma in Bengaluru; Editing by Shailesh Kuber