Dec 19 (Reuters) - ICE cotton futures jumped more than 3% to their highest in nearly two weeks on Monday, tracking gains in the oil market as the U.S. dollar retreated.

* The cotton contract for March CTH3 rose 3.44 cents, or 4.2%, at 85.36 cents per lb, by 11:48 ET (16:48 GMT), earlier hitting its highest since Dec. 6.

* Outside markets are supporting cotton here as "the dollar is little weak while crude oil is a little firmer," said Jack Scoville, vice president at Chicago-based Price Futures Group.

* The dollar was down, making U.S. cotton more appealing among holders of other currencies. USD/

* Oil rebounded on Monday on optimism over the Chinese economy and a recovery in fuel demand. Higher oil prices make polyester, a substitute for cotton, more expensive.O/R

* Considering the overall cotton demand picture "not only China but the rest of Southeast Asia, really starts to ramp up... then we could see quite a recovery indeed," Scoville added.

* Meanwhile, Chicago soybean and corn futures slid as worries over a global economic downturn weighed on prices. GRA/

* Total futures market volume fell by 5,675 to 15,263 lots. Data showed total open interest fell 496 to 199,515 contracts in the previous session.

* Data last week showed that speculators increased their net short position in ICE cotton by 3,524 contracts to 17,862 in week to Dec. 13.

(Reporting by Rahul Paswan in Bengaluru;)