* Expected damage from hurricane built into week's prices

* Traders work without key government statistics

By Marina Lopes

NEW YORK, Oct 4 (Reuters) - New York cotton prices fell slightly on Friday and closed the week lower ending a two-week winning streak as uncertainty over a U.S. government shutdown held down prices, even as a tropical storm headed for the cotton belt.

The most-active December cotton contract on ICE Futures U.S. settled down 0.26 cent, or 0.3 percent, at 87.18 cents a lb. Prices hit an intraday low of 86.82.

Fiber underperformed the broader commodity market, with the Thomson Reuters-Jefferies CRB index, a closely watched indicator for commodities, up 0.32 percent on the day.

U.S. equities rose modestly, containing losses that rippled through the market on the first days of the government shutdown.

Throughout the week, traders adjusted their prices to reflect expected damage to crops from Tropical Storm Karen, set to sweep through Alabama, Georgia, South Carolina and North Carolina over the weekend.

"The market has already risen in anticipation of those prices. I'm not anticipating widespread catastrophe in any means," said Mike Quinn, president of the Carolinas Cotton Growers Cooperative. He represents farmers in Virginia, Georgia, North and South Carolina.

Heavy rains and wind could damage crops, which have already been delayed. An estimated 66 percent of boll are currently open, compared with 75 percent this time last year.

"If the heavy rain occurs very near the coast and if weather clears off after Karen passes, yields may not suffer as much," Sharon Johnson, a cotton specialist at KCG Futures in Atlanta, wrote in a report.

The market continued to work without crucial government statistics and services, including the export sales report, a key indicator of demand for U.S. cotton from the U.S. Department of Agriculture and the first major statistic withheld because of the shutdown.

Traders worry that a prolonged political stalemate will damage the world's largest economy's tentative recovery and hurt demand for clothing.

The weekly Commitment of Traders report was not released on Friday and traders worry that dragging the shutdown into a second week will delay the release of the much-anticipated monthly crop report due on Oct. 11.

Mills, merchants and farmers rely on the data for insight into the health of the U.S. and global market. With the U.S. crop behind schedule, next week's report would be all the more essential reading, dealers said. (Reporting By Marina Lopes; Editing by Josephine Mason and Andre Grenon)