NEW YORK, Nov 22 (Reuters) - U.S. cotton futures ended
lower on Monday, after falling by the daily 6-cent limit for a
second straight session, as weak overnight prices in No. 1
consumer China fed through to the New York open and a firmer
dollar added to the weaker tone, dealers said.

'China's values were down again overnight so that was
really the driving force behind what we are doing,' said Sharon
Johnson, cotton specialist at First Capitol Group in Atlanta,
Georgia.

The benchmark March cotton contract on ICE Futures
U.S. ended down 5.36 cents, or 4.4 percent, at $1.1779 per lb
but above an earlier 6-cent downside limit move to $1.1715 per
lb.

That daily trading limit will remain in place for business
conducted on Tuesday, Nov. 23, according to the Ice Futures
U.S. website.

Limits do not expand beyond 6 cents, the website said.
The March cotton contract is down nearly 23 percent from
its all-time peak at $1.5195 per lb on Nov. 10.

'This thing is not for the faint of heart,' said Jim Nunn
of Nunn Cotton Co in Brownsville, Tennessee.

'All of these markets tend to over-extend themselves at
some point in time, and this one certainly has been that. It
was probably too high, and it may still be too high,' Nunn
said.

Volume was relatively strong at 30,806 lots by 2:50 p.m.
EST (1950 GMT), above Friday's final count of 25,293 lots but
nearly 18 percent below the 30-day average 37,440 lots, Thomson
Reuters preliminary data showed.

Cotton has been hit hard in recent days 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.

In China, the Zhengzhou Commodity Exchange's key May cotton
contract was last traded Monday at 25,870 yuan per
tonne, down 1,315 yuan on the day.

Losses in the cotton market were further compounded by
weaker outside markets as the U.S. dollar strengthened after
worries about European debt worries mounted.

Turning to the fundamentals, cotton arrivals into India
during the 2010/11 season declined to 4.69 million bales as of
Nov. 21, from 4.81 million bales during the same period a year
ago as unseasonal rains dampened harvesting, state-run Cotton
Corp of India said on its website on Monday.