* Volumes light as dealers await better sense of sales pace
* U.S. retail sales hit by heavy discounts
* Some 226,000 bales tendered against Dec contract
NEW YORK, Dec 2 (Reuters) - Cotton futures fell on Monday, pressured by a stronger U.S. dollar and demand concerns after top consumer China began selling last week from its behemoth state reserves.
The benchmark March cotton contract on ICE Futures U.S. closed down 0.73 cent, or 0.9 percent, at 78.62 cents a lb.
The Thomson Reuters/Core Commodity CRB index was down on the day. The U.S. dollar index strengthened, pressuring dollar-traded commodities as it makes them more expensive to holders of other currencies.
Heavy discounts ate into sales during the Thanksgiving weekend, which includes the biggest shopping day of the year, a harbinger of a difficult holiday shopping season for the sellers of consumer products, including apparel.
China said it bought more than 417,000 tonnes of domestic cotton for state stocks last week, bringing its total purchases this season to above 3 million tonnes.
That was still about 10 percent lower than the year-earlier period as more stringent standards have slowed Beijing's buying pace this year.
China's strategic reserves have ballooned since Beijing launched its stockpiling program in 2011, paying above global prices to support farmers. Beijing began selling from those stocks last week.
Trading volumes were lighter than average as dealers waited to see the pace of China's sales in the coming weeks.
That pace will indicate how actively China's textile mills will opt for imports from the world's other major growers, including No. 2 producer India, where a bumper crop is being harvested.
"We're mostly rangebound with downside potential, depending on how China moves its stock," said Sterling Smith, a futures specialist at Citigroup in Chicago, referring to the state reserve auctions that began last week in the world's top consumer and producer.
Open interest has tumbled in recent weeks as speculators have fled the fiber market, taking the wind out of a rally that lifted benchmark prices to near 94-cent highs in mid-August.
Some 226,000 bales of cotton have been tendered against the December contract due to expire on Dec. 6, exchange data showed on Monday.
The December contract finished down 0.87 cent, or 1.1 percent, at 77.27 cents a lb. (Reporting by Chris Prentice; Editing by Peter Galloway)