SOFTS-ICE arabica coffee prices fall as rebound stalls

* Arabica coffee weighed by deteriorating fundamentals

* Raw sugar edges up towards prior session's 3-week high

* Cocoa edges up but remains near multi-month lows

(Adds quotes, updates prices)

LONDON, Dec 28 (Reuters) - Arabica coffee futures on ICE were lower on Friday, back on the defensive as a rebound from the lowest levels in more than two years petered out, while raw sugar and cocoa both posted modest gains.

March arabica coffee futures on ICE fell 1.10 cents or 0.7 percent to $1.4680 per lb at 1146 GMT while May dipped 1.70 cents or 1.1 percent to $1.49 per lb.

The second month contract hit a low of $1.4220 earlier this month, its weakest level since June 2010.

"We have seen a little bit of a rebound but it hasn't gone very far...This is a market where fundamentals are deteriorating," Credit Suisse analyst Tobias Merath said.

Merath said Brazil had harvested a large crop this year but exports so far have been lagging last year's pace.

Dealers have cited a reluctance of producers in Brazil to sell following a sharp decline in prices as one factor in the slow pace of exports.

"Our concern is that at one point in time the good crop will arrive in the market...The downtrend (in prices) is likely to continue," Merath said, adding his three month price forecast was $1.40 per lb and 12-month forecast was $1.30 per lb.

March robusta coffee futures were off $9 or 0.5 percent at $1,911 a tonne.

Certified coffee stocks held in NYSE Liffe nominated warehouses rose to 106,540 tonnes as of Dec. 24, up from 105,140 tonnes on Dec. 10, exchange data showed.

SURPLUS SUGAR

Raw sugar futures edged up towards the prior session's three-week high as the market extended its rebound after falling to the lowest levels in more than two years earlier this month.

"Sugar prices have seen a bit of a rebound but our outlook for the market remains quite negative," Credit Suisse analyst Merath said.

"All the trendlines are still pointing lower at this stage," he added.

March raw sugar futures on ICE were up 0.04 cent or 0.2 percent at 19.49 cents a lb. The front month hit a three-week high of 19.55 cents on Thursday.

The market sank to 18.31 cents earlier this month, its lowest level since August 2010, weighed by rising stocks as production outpaces demand.

"We think the market is very well supplied and there is very little potential for any rebound to be sustained," Merath said, adding his three-month price forecast was 18 cents.

March white sugar on Liffe fell $0.50 or 0.1 percent to $521.90 per tonne.

Cocoa prices were higher with March futures on ICE up $15 or 0.7 percent at $2,270 a tonne.

The contract fell to $2,250 on Thursday, the lowest level for the front month since July 26.

Credit Suisse analyst Merath said cocoa had the potential to move a bit higher with economic indicators stabilising and the global market expected to be roughly in balance in 2012/13.

Liffe May cocoa rose 4 pounds or 0.3 percent to 1,452 pounds a tonne. The contract hit 1,447 pounds on Thursday, the lowest level for the second month since June 1.

Valid cocoa stocks in NYSE Liffe's nominated warehouses rose to 51,070 tonnes as of Dec. 24, from 48,330 tonnes on Dec. 10, exchange data showed.

(Reporting by Nigel Hunt; Editing by Anthony Barker)