* Prices find support at intraday low of 83.56 cts/lb, drift higher

* U.S. government raises expectations for global, U.S. inventories

* Cotton poised for first weekly gain in four weeks

NEW YORK, Sept 12 (Reuters) - Cotton futures edged up on Thursday as technically-driven buying lifted fiber from losses following a U.S. government monthly outlook that was largely in line with expectations of ballooning global inventories.

The most-active December cotton contract on ICE Futures U.S. closed up 0.4 cent, or 0.5 percent, at 84.75 cents a lb.

The second-month contract briefly turned lower after U.S. Department of Agriculture (USDA) raised its outlook for both U.S. and global inventories by the end of the 2013/14 crop year in a monthly forecast.

The report reinforced concerns over the bearish fundamentals of the cotton market, though it was largely in line with expectations and buying resumed as the market found support at 83.56 cents per lb.

Even with cotton on track for its first weekly gain in four weeks, the second-month contract is down over 9 percent from a mid-August peak of 93.72 cents, as the speculators who drove a recent price rally have left the market in droves.

"We're still seeing some corrective price action after such a dramatic decline," said Jobe Moss, a broker with MCM Inc. In Lubbock, Texas.

Increases to the global production estimates came mostly on higher output from No. 2 grower India, which was largely expected after favorable growing conditions.

The report reinforced the bearish fundamentals of the cotton market, with inventories forecast to total more than 86 percent of global consumption by the end of July.

China's balance sheet showed little change from the USDA's previous forecast, with the country still expected to hold more than 60 percent of global inventories by the end of the crop year.

"The report landed pretty squarely overall in what most people were expecting," said Chris Kramedjian, a risk management consultant for INTL FCStone in Nashville, Tennessee.

"We're all sitting around, still waiting for the fundamentals to unfold," he said, pointing to continued uncertainty over the U.S. crop and demand from top consumer China.

The report forecast no changes to imports for China, where a government stockpiling program launched in 2011 has driven voracious demand for lower-priced cotton from other origins.

The USDA lowered its forecast for the U.S. crop on Thursday, though dealers said the outlook for the crop will become clearer in coming weeks as harvesting ramps up, dealers said. (Reporting by Chris Prentice)