* Fiber prices down in line with broader commodities markets
* Dealers brace for volatility on Friday on options expiry, fund roll, USDA report
* U.S. weekly export sales strong as low prices stir demand
NEW YORK, Nov 7 (Reuters) - Cotton futures eased on Thursday, giving back some of the previous session's gains as traders positioned themselves ahead of the U.S. government's monthly crop report and options expiration on Friday.
The most-active December cotton contract on ICE Futures U.S. closed down 0.31 cent, or 0.4 percent, at 76.76 cents a lb.
Fiber performed in line with the commodities sector, as Thomson Reuters/Core Commodity CRB index eased.
The U.S. dollar gained against a basket of global currencies, making dollar-traded commodities more expensive to holders of other currencies.
Cotton prices were weighed by options-related selling ahead of Friday's December options expiration and as index fund rolling from the December spot contract gathered pace.
Dealers eyed U.S. employment data and a monthly crop report due Friday.
Front-month prices rallied as much as 4 percent during the previous session on bargain-hunting at ten-month lows set as speculators have fled the cotton market.
U.S. government data showed on Wednesday that the noncommercial dealers slashed their net long stance to the lowest level this year after piling in to the cotton market and boosting their bullish bet to the highest level since 2008.
"The romance of cotton is over," said John Flanagan of Flanagan Trading Corp in North Carolina.
Speculation has built in recent days that China will soon begin sales from its state reserve, potentially flooding the world's top textile market with excess supplies and cooling import demand.
Weekly U.S. government export data showed that tumbling prices have spurred strong demand for U.S. cotton, though the data did not buoy prices from a loss on the day.
Export sales totaled 303,700 bales in the week ended Oct. 31, with more than 60 percent destined for Turkey and China.
Should the pace of recent export sales continue, U.S. shippers are on track to ship more in the 2013/14 crop year end-July than the 10.4 million bales forecast by the U.S. Agriculture Department.
Trading volumes were heavy at 27,770 lots on Thursday, 50 percent higher than the 250-day average, preliminary Thomson Reuters data showed.
Exchange stocks climbed to 175,750 bales on Wednesday, the most since July, according to exchange data compiled by Reuters. The climb has confirmed traders' expectations of a large rise in ICE inventories. (Reporting by Chris Prentice; editing by Matthew Lewis)
