* Fiber boosted as grains hit fresh highs
* Gains buck broader dismal mood on Spain's economic woes

NEW YORK, July 20 (Reuters) - Cotton futures rose for a
third consecutive session on Friday as fibers continued to get a
fillip from the soaring grains market and early, tentative
supply fears emerged after exchange stocks sank to February
lows.
The gains bucked an otherwise dismal sentiment across
commodities and financial markets which were spooked about the
euro-zone debt crisis after a Spanish region asked for financial
aid on Friday.
The benchmark December cotton contract on ICE Futures
U.S. nudged 0.43 percent higher to settle at 72.94 cents per lb,
after hitting an intraday high of 73.29 cents late in the day.
Trading volume was particularly low though at just over
9,000 lots, with some traders sitting on the sidelines unsettled
by the range-bound prices over the past three weeks.
The most-active contract has been trapped in a 4-cent range
since the start of July, but spreads with March have narrowed
dramatically reflecting early underlying concern about supplies
due to dwindling stocks.
"One of the major factors (in the market) is the
disappearance of certificated stocks," Mike Stevens, an
independent analyst in Mandeville, Louisiana, told Reuters.
March's premium narrowed to just 0.53 cent on Friday from as
much as 1.60 cents in mid-June and over 2 cents at the start of
June.
Over 5,000 bales were decertificated on Friday, taking ICE
exchange stocks to just under 78,000 bales, their lowest level
since February and almost half the levels seen in May.
Most traders believe the drawdown is due to shipments to
China, but concerns are mounting that inventory may not be
replenished before the next crop hits the market later this
year.
Sluggish demand from textile mills due to the weak global
economy has kept worries in check.
Even so narrowing spreads and the drought across in the U.S.
Corn belt that has sent soybean prices to record levels on an
almost daily basis have unnerved the market. All-time grain
prices will attract plantings away from fiber later in the year.
"There's a lot of anxiety about what's ahead," said Stevens.