* Expectations for late U.S. crop support prices -broker

* Cotton rallies on buy stops, pares day's gains

* Investors seen positioning ahead of central bank meetings

NEW YORK, July 30 (Reuters) - Cotton futures rose on Tuesday amid concerns about tight U.S. supplies, but still finished down from the day's high, dealers said.

The benchmark December cotton contract on ICE Futures U.S. edged up 0.43 cent, or 0.5 percent, to settle at 85.14 cents per lb.

Trading volume was light despite a brief flurry when chart-based buy orders lifted prices 1.8 percent to an intraday high of 86.24 cents, dealers said.

Financial markets pared earlier gains, that had developed in reaction to boosts in euro zone and business confidence. Investors have been positioning themselves ahead of this week's meetings of the U.S., British, and euro zone central banks.

Cotton prices have withstood recent pressure from the recent drop in the grain markets, and have remained in tight range between 84.56 and 86.55 cents for the last eight sessions. Cotton competes with grain for acreage.

"Cotton has been holding its ground rather well because of traders' expectations over the questionable U.S. crop, even though global supplies are expanding and there's a tremendous amount of uncertainty about Chinese policy," said Chris Kramedjian, a risk management consultant for INTL FCStone in Nashville, Tennessee.

Expectations of tight nearby supplies in the United States, the world's top exporter, have supported prices despite forecasts of record global inventories.

A government stockpiling program in China, launched in 2011, has driven big increases in global inventories and demand for foreign cotton in the world' top textile market.

Unfavorable planting and growing conditions have traders concerned that supplies could be delayed in the United States, the world's top exporter, at the start of the new crop year on Aug. 1.

Exchange stocks on Monday were about 148,000 bales, according to the most recent ICE data, down from more than 600,000 at the start of the month.

The concerns about tight nearby U.S. supplies drove December cotton prices to a premium over March 2014 prices. That is unusual for a market expecting a global surplus, merchants said. (Reporting by Chris Prentice; Editing by Bob Burgdorfer)