Aug 15 (Reuters) -ICE cotton futures rose on Thursday despite a stronger dollar as upbeat risk sentiment in wider financial and commodities markets following stronger-than-expected U.S. economic data seeped into the natural fiber.

* Cotton contracts for December CTZ4 rose 0.18 cent, or 0.27%, at 67.23 cents per lb at 12:56 p.m. EDT (1656 GMT), after dropping more than 1% in the previous session.

* "It's just a little bit of technical trading with this little bounce back today more than anything, but we don't really see a lot of activity behind it except that it's just testing that $0.67 level for support," said Bailey Thomen, cotton risk management consultant at StoneX Group.

* Wall Street rose by 1% and oil prices extended gains due to strong July retail sales data, suggesting resilient consumer spending and easing recession concerns in the world's largest economy. .N O/R

* Higher oil prices make cotton-substitute polyester more expensive.

* U.S. retail sales rose more than expected in July, which could help to allay financial market fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate.

* Meanwhile, Chicago wheat rose as an overnight Russian attack on Ukraine's Odesa grain export port, and expectations of lower output in France, underpinned prices. GRA/

* U.S. Department of Agriculture's weekly report showed exports of 131,300 running bales of cotton, whereas net sales of upland cotton totalled 110,900 RB for 2024/2025. EXP/COT

* "The export sales data contributed to some stability for prices without any further surprises here," said Thomen, adding that upcoming Hurricanes in next couple of months will potentially provide some support for prices.

* Limiting gains in cotton, the dollar =USD rose 0.4% against its rivals, making cotton more expensive for other currency holders. USD/

Reporting by Anmol Choubey and Brijesh Patel in Bengaluru; Editing by Vijay Kishore