NEW YORK, Jan 12 (Reuters) - U.S. cotton futures closed
higher Wednesday on investor buying, boosted by a strong grains
complex, a weak dollar and a rally in equities after a strong
debt sale by Portugal, analysts said.

The key March cotton contract on ICE Futures U.S.
rose 0.72 cent to settle at $1.4797 per lb, having briefly hit
the 5-cent trading limit at $1.5225. The session low was at
$1.477.

Volume traded was around 29,000 lots, more than 60 percent
above the 30-day norm, Thomson Reuters preliminary data
showed.

'Cotton got caught up in the bullish enthusiasm of corn and
soybeans, strong stock markets and weakness in the U.S.
dollar,' said Mike Stevens, an independent cotton analyst in
Mandeville, Louisiana.

Global stocks and the euro rallied after healthy demand for
Portugal's debt eased concern over euro zone debt.

There was little reaction from cotton market players to the
U.S. Agriculture Department's monthly supply/demand report.

USDA reduced its estimate for 2010/11 world cotton ending
stocks to 42.84 million (480-lb) bales, from 43.39 million in
last month's report.

Stevens said the data 'merely confirmed' cotton's bullish
fundamentals.

Rebalancing by index funds of their positions in the cotton
market depressed values midway through trading, dealers said.
The process of realigning positions is expected to run into
next week, they said.

But the strong outside markets blunted the fall and led
cotton futures higher into the close.

The market will now be looking toward the USDA's weekly
export sales report on Thursday.

Brokers said they expected total U.S. cotton sales to range
from 100,000 to 200,000 (500-lb) running bales, compared with
169,100 RBs in the last USDA report.

The market is now waiting to see if demand is destroyed by
the strong cotton futures price going into the spring.