* Cotton falls by 6-cent limit for 3rd straight session
* Weak macroeconomics add extra pressure
* Next level of support eyed near $1.00/lb (Updates with closing prices, analyst comments)
By Chris Kelly and Marcy Nicholson
NEW YORK, Nov 23 (Reuters) - U.S. cotton futures fell by their daily 6-cent limit for the third straight session on Tuesday, notching their biggest 3-day decline in more than 15 years, as Korean tensions and euro zone debt concerns accelerated the market's recent correction from record peaks.
Cotton has been hit hard in recent weeks by mounting fears that China may take aggressive action to curb inflation running at a 25-month high, raising interest rates or capping domestic prices with measures that could crimp commodity demand or drain liquidity from bubbling domestic markets.
The benchmark March cotton contract on ICE Futures U.S. ended down the 6-cent limit, or 5.1 percent, at $1.1179 per lb.
Cotton was the biggest loser in the CRB Index on Tuesday. (Graphic: http://link.reuters.com/syc86q )
The spot December contract, which traded in thin dealings, fell as much as 11.05 cents as it was no longer subjected to price limit restrictions after entering its notice period on Tuesday.
World stocks fell across the board while the dollar rose after tensions in the Korean peninsula prompted investors to shed risky assets, and the euro stayed under pressure as Ireland's debt crisis raged on.
"The market was overdone. The financial situation and just more liquidation" were weighing on prices, said Bill Raffety, senior analyst for futures brokerage Penson.
"Fundamentally, I don't think things have changed, I think the market just got away from itself. There's a lot of profit taking coming in," Raffety said, referring to cotton futures.
"(Funds) are definitely paring back their positions. Part of it is due to the steps they're taking in China," Raffety said.
The March contract has lost 26 percent of its value since hitting a record high $1.5195 per lb earlier this month.
Sharon Johnson, cotton specialist at First Capitol Group in Atlanta, Georgia, said the market's inability to hold support at the 50 percent retracement level at $1.1273 and the 50-day moving average at $1.1320 signaled more losses were in store for the market.
"Normally, that 50 percent retracement and the 50-day ... either one, let alone both, carry a lot of weight, but that's not what's pushing the market. It's all China and those numbers don't mean anything to China," she said.
"If they stabilize, then we will," she said.
In China, the Zhengzhou Commodity Exchange's key May cotton contract ended down 1,225 yuan at 25,225 yuan per tonne.
Johnson pegged new support at the 62 percent retracement at around the $1.03 level.
"Somewhere between here and a dollar should be it," she said.
