* Open interest down 9 pct since start of April
* Spot prices down 11 pct from 1-year high last month
* Certified stocks at near 3-year high
NEW YORK, April 16 (Reuters) - ICE cotton fell for a second session as investors continued to liquidate and mills held off purchasing into the falling market, with spot prices down over 11 percent from a one-year high touched last month during a speculator-driven rally.
The most-active July cotton contract on ICE Futures U.S. edged down 0.7 cent, or 0.8 percent, to close at 85.42 cents per pound on Tuesday.
The spot May contract settled down 0.98 cent, or 1.2 percent, at 83.35 cents a lb, down from a one-year high of 93.93 cents touched on March 15.
Cotton slid during a broad commodities selloff on Monday prompted by concern over economic growth in China, the world's top textile market.
Even as Thomson Reuters-Jefferies CRB index, a benchmark for global commodities, recovered much of the previous session's losses, fiber fell again on Tuesday, with investors seen continuing to liquidate their long positions in cotton.
The recent price rally had been underpinned by solid demand in the physical market, in addition to speculators' investment. As upward momentum has waned, mills have been purchasing on a more limited basis, not enough to outweigh a notable decline in open interest as investors joined in the selling, dealers said.
"Cotton is in the process of finding its value level. It hasn't gotten to the point where (the mills) say it's worth me buying now," said Ron Lawson, a partner at commodity investment firm LOGIC Advisors.
He noted that mills still need to purchase to meet textile demand and that the physical market may find support in the 80- to 81-cent range.
Open interest totaled 189,975 contracts on Monday, down about 9 percent from the start of the month, according to ICE data.
Speculators helped drive a price surge of 18 percent during the first quarter, as they boosted their bullish stance in cotton futures and options to the highest level since 2008 last month. As noncommercial dealers slashed their long position during the week ended April 9, prices slumped about 5 percent.
July cotton has fallen below technical support levels at its recent moving averages, dealers have said.
Exchange stocks reached 462,403 bales on Monday, ICE data showed, continuing their climb to the highest level since June 2010. About another 22,000 awaited review by the U.S. Agriculture Department.
A slowdown in China's economic growth could dent global cotton demand, as the country is the world's top consumer of fiber.
China is forecast to hold more than half of global inventories by the end of the crop year through July, thanks to a stockpiling program begun in 2011 and expected to continue this year.
Prior to the recent rally, prices had fallen for two years, as lower-priced, synthetic alternatives eroded demand for cotton, and global inventories grew. (Reporting by Chris Prentice; Editing by Phil Berlowitz)