NEW YORK, Sept 22 (Reuters) - Cotton futures finished at a 1-1/2 month
low Thursday on investment fund liquidation sparked by worries over U.S.
economic growth and a slowdown as the manufacturing sector contracts in No.
1 consumer China, brokers said.

World stocks and commodities dove as weak data from China crystallized
investor fears of a global recession.

'You've got a meltdown in all these other markets,' said independent
analyst Mike Stevens of Mandeville, Louisiana. 'It's all attached to the
Fed (action on stimulus) and China.'

The key December cotton contract on ICE Futures U.S. dropped
3.54 cents or 3.4 percent to end at 99.29 cents a lb, trading from 99.07
cents to $1.0283.

It was the first time since Aug. 11 when the second position cotton
contract closed under the psychological $1 per lb mark.

Total volume traded on Thursday hit over 20,600 lots, almost
three-fourths over the 30-day norm, preliminary Thomson Reuters data
showed.

Stevens said the drubbing in cotton could have been a lot worse, but
the market ran into trade buying, hedge fund purchases and possible mill
fixation activity which enabled fiber contracts to prune its losses.

'You had lots of spec shortcovering, trade buying on the low end of the
scale. and possible mill fixation buying,' a dealer said.

The traders said there may be a slight recovery on Friday, but future
action will be dominated by the macro environment dictating movements in
the commodity sector.

The market will now turn its attention to the U.S. Agriculture
Department's monthly supply-demand report in October which should give a
better idea of the size of the U.S. cotton crop in 2011/12, traders said.

Total volume traded Wednesday in the cotton market reached 15,954 lots,
versus the previous session's count at 12,893 lots, ICE Futures U.S. data
showed.

Open interest stood at 149,373 lots as of Sept 21, the lowest level
since Sept 6 and compared to the prior tally of 150,007 lots, the exchange
said.