NEW YORK, Nov 17 (Reuters) - Cotton futures settled down
the daily limit on Thursday on investor liquidation as weak
demand and fear over a global recession which hit other
financial markets depressed fiber contracts, analysts said.

The spot December cotton contract on ICE Futures
U.S. dropped 4.00 cents to finish at 99.50 cents per lb, with
the day's top at $1.0396.

The now most-active March cotton futures fell 4.00
cents to end at 96.48 cents, with the session high at $1.0085.

Total volume traded Thursday hit over 21,000 lots, little
different from the 30-day norm, preliminary Thomson Reuters
data showed.

Mike Stevens, an independent analyst in Louisiana, said
speculative accounts had lifted the market over the past few
sessions.

But he said the combination of weak demand and falling
financial markets as investors fretted the euro zone debt
crisis could spread further undermined cotton and other
commodity markets.

'You look at all the outside markets, there's no incentive
to defend' long speculative positions in cotton, said Stevens.

The shakiness of the demand outlook could be seen in news
that industry publication Cotlook cut its forecast of world
2011/12 cotton consumption and raised its estimate of world
2011/12 cotton ending stocks.

The Chinese were again the big buyers in the U.S.
Agriculture Department's weekly export sales report on
Thursday, but one dealer feels the reaction of cotton futures
was one of 'buying the rumor and selling the fact.'

Open interest in cotton, usually taken as an indicator of
investor exposure in cotton, stood at 140,095 lots as of Nov.
16, from the prior tally of 143,259 lots, exchange data
showed.

Total volume traded Wednesday in the cotton market reached
25,736 lots as of Nov. 16, from the previous 57,321 lots which
is the highest level traded since Feb. 18, ICE futures U.S.
data said.