Aug 2 (Reuters) -ICE cotton futures rose on Friday and were set for weekly gains,with the natural fiber gaining support from a slide in the U.S. dollar following the release of weaker-than-expected jobs data.

* Cotton contract for December CTZ4 rose 0.41 cents,or 0.59%, at 68.48 cents per lb at 12:20 p.m. ET (1620 GMT) and has gained 0.6% so far this week.

* Cotton is just holding in the $0.68-0.70 range, dollar's weakness could be the supporting element for the cotton market, said Peter Egli, director of risk management at British merchant Plexus Cotton.

* The U.S. dollar dropped to a four-month low after a weaker-than-expected employment report for July raised expectations that the Federal Reserve will cut interest rates by 50 basis points in September as the economy sours. A weaker dollar makes cotton less expensive for buyers holding other currencies. USD/

* "We have a lot of supply in the world and demand is slowing as the economic news shows, not much hope at the moment for a big rally," Egli added.

* The U.S. Department of Agriculture (USDA) on Thursday showed export sales of 129,900 running bales, down 1% from the previous week and 11% lower from the prior 4-week average. EXP/COT

* In the U.S., the USDA expects the crop volume to be significantly larger this year - more than 1 million tons higher than the previous year, Commerzbank said in a note.

* "The reason for this is a significantly larger harvested area, as the area planted has been expanded and there is expected to be a significantly lower abandonment rate," the note added.

* In the grains market, Chicago corn and soybean futures rose on Friday but were still near four-year lows and headed for weekly losses as forecasts for cool, rainy weather in the U.S. corn belt improved the supply outlook.GRA/

Reporting by Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid