* Weekly export sales biggest in three months
* Data reveals surprise China buying
* Concerns about waning demand, record surplus weigh

NEW YORK, Sept 13 (Reuters) - U.S. cotton futures bounced
back up from below 73 cents on Thursday after U.S. data revealed
the country's biggest weekly export sales since June, boosting
sentiment in a market struggling with a record surplus and weak
demand.
With the vast majority of the 317,500 running bales sold
heading for China, the purchases were the first concrete sign
since June that the world's largest consumer may have resumed
buying.
It was not clear if the sales were part of Beijing's efforts
to replenish its strategic reserve or if mills have restarted
importing after fresh licenses were distributed last month.
Either way, the exports encouraged the market that had been
disappointed the previous day by a U.S. Department of
Agriculture market report.
The benchmark December contract posted its first rise
after three days of losses, settling up 0.3 percent at 73.53
cents per lb, hitting a session high of 74.13.
Trading volumes were average at around 14,000 lots, half of
the previous session's hefty traffic.
In the weekly upland export sales report, some 317,500
running bales were registered in the latest reporting week, the
most since this season started on Aug. 1. Levels have averaged
below 100,000 bales in the past three months.
China, the world's No. 1 consumer and producer, accounted
for 84 percent of the total.
"It's much higher than expected. I thought there was some
business (to China), but figured it was around 100,000. This
sounds like a reserve purchase," said Andy Ryan, risk management
consultant at INTL FCStone.
A Memphis-based broker said the sales were more likely to be
mills using new quotas issued last month to buy fibers abroad.

Mills need high-quality foreign cotton because Beijing's
stockpiling program has kept domestic prices elevated in a bid
to support local farmers.
Beijing has been preparing to kick-start its second year of
buying, although it is also due to auction off some of its
existing reserve to make room for new purchases.

China's stockpile accounts for almost half of the world's
inventory.
Cotton also got a boost when the Federal Reserve announced
it will buy $40 billion of mortgage debt per month until the
U.S. jobs outlook improves substantially.
Cotton underperformed other commodities after the Fed
announcement, as gold bolted 2 percent higher and the Thomson
Reuters-Jefferies CRB index rose 0.55 percent.

LINGERING CONCERNS
The sales data is unlikely to quell long-term cotton market
concerns though about waning demand and a record surplus that
have kept prices under 80 cents per lb since May.
On Wednesday, the U.S. Department of Agriculture increased
its estimate for the global cotton surplus to a record of 76.5
million 480-pound bales due in part to a drop in consumption and
imports by China.
The new forecast boosted by nearly 2 million bales last
month's estimate -- already the highest since USDA records began
in 1960. A large carryover from last season was also a factor.