NEW YORK, Oct 3 (Reuters) - Cotton futures settled easier Monday on
investor sales sparked by fears of recession as the market's weak third
quarter performance spilled over into the first trading day of the last
quarter of 2011, analysts said.

The key December cotton contract on ICE Futures U.S. lost 0.98
cent to end at 99.21 cents per lb, trading from 98.25 cents to $1.0065. The
market has been pinned in a rough range from 98 cents to $1.0317 over the
past five sessions.

The cotton market was the 7th worst performing commodity on the Reuters
Jefferies commodity index in the third quarter of 2011.

(Graphic: http://link.reuters.com/ban24s )

Cotton traded on ICE Futures U.S. posted its worst two quarter
performance since 2008, Thomson Reuters data showed.

Total volume traded Monday hit almost 12,200 lots, little changed from
the 30-day norm, preliminary Thomson Reuters data showed.

The main catalyst for the downturn is news that world stocks dropped
Monday and the euro slid to an 8-1/2 month low versus the dollar due to
growing fears of a Greek default.

'The outside markets are negative,' Jobe Moss, an analyst for brokers
and merchants MCM Inc in Lubbock, Texas, said when asked about cotton's
losses.

'The debt crisis throughout the world is the 800 pound gorilla in the
room right now and of course that could trump all factors both bullish and
bearish,' said a weekly commentary by brokers VIP Commodities. 'But as far
as cotton goes, she's holding steady on some rough seas.'

Traders said falls in cotton have often run into steady commercial and
mill buying below the psychological $1 a lb level.

The amount of investor interest in cotton improved slightly as open
interest stood at 151,074 lots as of Sept 30, up slightly from 149,071 lots
on Sept 29, the exchange said.

Total volume on Friday reached 18,981 lots from the previous session's
count at 16,867 lots, ICE Futures U.S. data showed.