* Long-awaited crop report largely in line with expectations
* Trading heavy and volatile ahead of Dec. options expiry
* Spot prices finish week up for first time in 5 weeks
NEW YORK, Nov 8 (Reuters) - Cotton futures finished little changed on Friday after a volatile session ahead of options expiration and as the U.S. Agriculture Department boosted its outlook for record global inventories.
The most-active March cotton contract on ICE Futures U.S. eased 0.22 cent, or 0.3 percent, to settle at 78.64 cents a lb.
The front-month ICE December contract closed up 0.12 cent, or 0.2 percent, at 76.88 cents a lb, ending the week with a slight gain after four straight weeks of loss.
The Thomson Reuters/Core Commodity CRB rose, and strong U.S. jobs growth boosted financial markets and the U.S. dollar.
The USDA made few significant changes to the world's cotton balance sheet in its long-awaited government crop report.
Cotton trading was volatile throughout the week, with spot prices spiking as much as 4 percent on Wednesday after a historic rout left them hugely oversold.
Volumes were heavy as the liquidation out of the December contract gathered pace and ahead of Friday's December contract options expiration.
"We've got the index fund roll and options expiration, and we've come so far so fast, the market is having to take a little breather here," said Jobe Moss, a broker with MCM Inc in Lubbock, Texas.
Prior to the price rally on Wednesday, spot prices closed down 13 straight sessions, the longest rout since at least 1980, that pressured prices to the weakest levels since January.
Cotton prices pared earlier gains after the USDA raised its outlook for record global inventories by the end of the 2013/14 crop year and upped its forecast for U.S. production.
Outside of a surprise boost to India's beginning stocks level, the report was largely in line with industry expectations and was seen as "mixed" to bearish.
Prices are down some 18 percent from August highs near 94 cents as speculators have fled the cotton market.
Noncommercial dealers again cut their net long on cotton futures and options in the week ending Nov. 5, U.S. weekly government data showed on Friday.
That was their smallest bullish position year-to-date.
Speculation has grown that China will soon begin selling from its state reserve, potentially dumping huge inventories on the world's top textile market and crimping import.
Exchanges stocks totaled 172,734 bales on Thursday, ticking down from 175,750 bales previously, the most recent ICE data showed.
That was the first decrease since September, though exchange inventories remain at the highest levels since July, data compiled by Reuters show. (Reporting by Chris Prentice; Editing by Marguerita Choy)
