NEW YORK, Jan 17 (Reuters) - Cotton futures settled on Tuesday at a two-month high on speculative short-covering driven in part by news that sowings in leading consumer China may be down sharply in 2012, analysts said.

Benchmark March cotton futures rose 2.72 cents or nearly 3 percent to finish at 98.19 cents per lb, dealing between 95.67 and 99.47 cents. It was the highest settlement for the spot contract since mid-November, Thomson Reuters data showed.

Volume jumped to around 31,000 lots, more than double the 30-day norm, according to preliminary Thomson Reuters data.

Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta, Georgia, said fiber contracts were buoyed by speculative short-covering and a stronger tone in stock and commodity markets.

News that China's cotton planting area in 2012 is expected to fall 10.5 percent due to reduced profits aided sentiment, she said.

The Chinese number 'is the lowest we have heard so far' and could be the lowest acreage figure in years, Johnson said.

Mike Stevens, an independent analyst in Mandeville, Louisiana, said the market also gained support from expectations that China might boost cotton purchases to boost reserves in coming months.

Cotton has been supported by Chinese buying as the Asian giant purchases the fiber for its state stockpiles and in anticipation of slightly lower U.S. plantings.

Total volume traded last Friday reached 18,503 lots, ICE Futures U.S. data showed.

Open interest - an indicator of investor exposure - in the cotton market stood at 154,319 lots as of Jan. 13, the exchange said.