* China PMI, U.S. housing data stokes demand worries
* Mills wait to final moments to price May bales -traders
* May contract catapults to premium during day's gyrations
NEW YORK, April 23 (Reuters) - Benchmark cotton futures tumbled on Wednesday on worry over fiber demand due to weak economic data from the United States and China and on spread-related dealings as the May contract headed into delivery period.
Sell-stops propelled the most-active July cotton contract down more than 2 percent to a one-week low of 90.73 cents a lb before it closed down 0.61 cent, or 0.7 percent, at 92.64 cents a lb.
Fiber clawed back the day's sharpest losses as mills saw the drop as an opportunity to set prices on previously booked bales.
Factory activity in China shrank for a fourth straight month in April, signaling economic weakness continued into the second quarter in the world's top consumer of many raw materials, including cotton.
Disappointing data showed sales of new U.S. single-family homes tumbled to an eight-month low in March, intensifying concern over consumer demand for goods, including apparel.
"The Chinese data was weak, and we've been ripe for a fall," said Keith Brown of commodity brokerage Keith Brown & Co in Moultrie, Georgia, noting sell-stops triggered along the way.
Even so, the front-month May contract, which is due to expire on May 7, rallied during its final day of trade ahead of the delivery period.
The front-month shot as high as 93.21 cents a lb in spread-related gyrations that erased its discount against the July contract CT-1=R as it settled up 1.89 cents, or 2.1 percent, at 92.90 cents a lb.
"Mills are pulling the lever and saying let's price it here, and others are rolling forward (into July)," said Sharon Johnson, a cotton specialist with KCG Futures in Georgia.
It was the May contract's final trading session ahead of the delivery period.
Traders said they expect one or more large merchants may buy bales through the exchange during the delivery period, due to tight nearby supplies in the United States after U.S. farmers grew less cotton than forecast in the 2013/14 crop year that runs through end-July. (Reporting by Chris Prentice; Editing by Peter Galloway)
