* Rains in No 2 producer India stoke supply worry, buoy prices

* Fiber slides to biggest weekly loss in 7 weeks

* Monthly USDA crop data unpublished due to the U.S. government shutdown

By Marina Lopes

NEW YORK, Oct 11 (Reuters) - Cotton futures edged up on Friday as rain in India threatened supplies in the world's No. 2 producer, though prices still posted the biggest weekly loss since late August.

The most-active December cotton contract on ICE Futures U.S. edged up 0.20 cent, or 0.2 percent, to settle at 83.37 cents a lb.

Friday's slight gains were not enough to offset steep losses early in the week and fiber posted its biggest weekly drop in seven weeks.

Cotton on Friday outperformed the broader commodity market, as the Thomson Reuters-Jefferies CRB index fell 0.27 percent on the day.

Equities and the dollar extended Thursday's gains on Friday, with major stock indexes up as investors were optimistic that Washington leaders will reach a deal this weekend on debt limit and budget.

Mill buying and supply concerns underpinned cotton prices.

"We continue to find some mill interest in part because of excessive rains in past month are causing India to run behind on its harvest," said Sharon Johnson, a cotton specialist at KCG Futures in Atlanta.

The impasse over the U.S. government shutdown kept pressure on prices for much of the week.

Cotton plunged on Monday after Tropical Storm Karen dissipated over the Gulf of Mexico and left key growing regions in the United States, the world's top exporter, largely unscathed.

A second week of the U.S. government shutdown has denied traders access to crucial government statistics, like the crop report, which was to be released on Friday.

"With nothing from the USDA about domestic or foreign crops, we're just flying blind," Johnson said.

The shutdown has added to U.S. farmers' worries and forced them to use commercial lenders in the absence of $3 billion worth of federal loans.

An uptick in certified stocks has pushed the December contract to a discount to the March contract this week for the first time in months.

The December contract had been trading at a premium as a steep drop in exchange stocks and crop worries stoked concerns about tight nearby supplies in the United States. (Editing by Bob Burgdorfer)