NEW YORK, Aug 17 (Reuters) - Cotton futures settled Thursday up their
daily limit on investor buying on bullish technicals and analysts said a
more stable economic environment should nudge fiber higher this week.

Oil prices were firmer and gold prices steady after a two-day rally as
the steadier tone of outside commodity markets gave some support to cotton.

The key December cotton contract on ICE Futures U.S. rose the
4-cent limit or nearly 4 percent to finish at $1.0785 per lb, with the
session low at $1.0288.

Total volume traded hit over 18,100 lots, almost a third above the
30-day norm, Reuters data said.

Independent Louisiana-based analyst Mike Stevens said the December
contract appears poised to challenge topside resistance around $1.0888.

He said in a report the finish over $1.0552 tends to confirm the
current rally in cotton.

Traders said the market also received a boost from talk of rains in
Pakistan, sparking memories of last year when crippling floods in that
country helped stoke the rally to record highs in the market.

'Some traders are likely taking a 'shoot first and ask questions later'
attitude' towards the situation in Pakistan, Stevens explained in a
report.

The level of investor interest stayed near its recent lows. Open
interest was at 141,177 lots as of Aug. 16, only a few hundred lots above
the 140,442 lots on Aug. 11 which was then the lowest level in over two
weeks, ICE Futures U.S. data showed.

Total volume traded Tuesday hit 7,113 lots, the lowest level of
business since May 23, ICE data showed.

On Thursday, the trade will be looking at the U.S. Agriculture
Department's weekly export sales report to gauge the pace of U.S. cotton
sales.