* Prices mostly ease in a slim range and light volume

* Heavy rains expected to moisten dry Texas growing regions

* Higher interest rates in India may stifle cotton demand

NEW YORK, July 15 (Reuters) - Cotton futures finished mostly lower on Monday, hurt by forecasts for badly needed rains on dry Texas cotton-growing lands and expectations for slower demand after India raised interest rates.

Most-active December cotton futures on ICE Futures U.S. was the only contract to end with gains. It edged up 0.02 cent to close at 85.10 cents a lb in light volume of 6,162 lots.

The rest of the board all posted moderate losses.

"There is going to be some large rainfalls moving into West Texas in the next few days. It hasn't come yet, but it's coming," said Sterling Smith, futures specialist at Citigroup in Chicago, adding that meteorologists think the coming rains will be "a game-changer for the crop there."

If heavy rains hit Texas as forecast, output in the top-growing state will be greatly increased. The area has suffered losses of up to 40 percent from severe dryness.

"If we see that area's production improve, it will put more cotton on the market," Smith said.

Adding to supply concerns, India raised its prime interest rate by 200 basis points overnight. The country is a large producer of cotton, much of which gets sold to the export market.

If the interest rate hike slows India's economy, domestic demand for its cotton may slow as well.

"If we see their economy slow, they will be quite willing to dump a lot of that cotton on the world market," Smith said.

As a knock-on effect, India will likely take few imports of cotton from China and other neighboring growers, increasing world stocks.

In last week's release of the monthly cotton supply and demand report, U.S. Department of Agriculture (USDA) forecasts already heightened concerns about ballooning global inventories.

That outlook has reinforced concerns about a surplus that have hung over the market since a 2011 run-up that prompted mills to switch to lower-priced, synthetic alternatives.

But Beijing's stockpiling for its state reserves has tightened supplies elsewhere in the world, underpinning global prices.

China, the world's top textile market, is expected to hold more than 60 percent of global reserves by the end of July 2014. (Reporting by Carole Vaporean; editing by Matthew Lewis)