Sept 3 (Reuters) -ICE cotton futures gained more than 1% on Tuesday, hitting their highest level in over a week, as upbeat sentiment in the grains market supported the natural fiber, while potential tropical disturbances in the Atlantic fueled weather concerns.

* Cotton contracts for December CTZ4 rose 0.78 cent, or 1.1%, to 70.77 cents per lb at 11:18 a.m. EDT (1518 GMT), its highest since Aug. 25.

* The contract gained 1.5% in August, snapping a four-month losing streak.

* "All of the Chicago grain markets are strongly higher, so that's putting a bid under the cotton market," said Rogers Varner, president of Varner Brokerage in Cleveland.

* Weather concerns are driving prices as well, with three tropical waves in the Atlantic and one approaching the Caribbean, he said.

* Chicago grain futures gained on technical support and bargain buying, while soybean futures hit a near four-week high as China plannedto launch an anti-dumping investigation into imports of Canadian canola. GRA/

* Farmers selling could potentially limit gains, "but I don't see that until the market would trade in the 73 to 74 cent area," Varner said.

* Elsewhere, oil prices dropped more than 3% after Bloomberg News reported a deal was imminent to resolve a dispute that has halted Libyan production and exports. O/R

Reporting by Anjana Anil in Bengaluru; Editing by Shreya Biswas