April 24 (Reuters) - ICE cotton futures fell 3.1 percent on Tuesday in the biggest one-day percentage decline in over seven months, hurt by weaker demand and expectations of rain in Texas- the major cotton growing region in the United States.

* The most active ICE cotton contract for July expiry CTN8 settled down 2.61 cent, or 3.10 percent, at 81.51 cents per lb. This was the biggest one-day percentage fall for the contract since September 12 last year.

* It traded within a range of 81.36 cents a lb., its lowest level since April 5, and 84.55 cents a lb.

* It is the first notice day for the May contract.

* "Merchants report lackluster demand and there is a forecast that West Texas will get a small amount of rain tomorrow," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.

* "Other markets have come down a little bit, the stock market is down, the grain markets have come down, so cotton is following other markets."

* A gauge of world stocks dipped on Tuesday, relinquishing earlier gains after benchmark U.S. bond yields crossed above the three percent threshold for the first time in four years, while oil prices stretched above the $75 per barrel mark. MKTS/GLOB

* U.S. wheat futures fell to their lowest in nearly three weeks on Tuesday, while soybean futures also were trading in negative territory. GRA/

* Total futures market volume rose by 1,700 to 38,736 lots. Data showed total open interest gained 2,198 to 264,779 contracts in the previous session.

* Certificated cotton stocks CERT-COT-STX deliverable as of April 23 totaled 67,997 480-lb bales, down from 68,436 in the previous session.