SOFTS-ICE sugar falls on stronger dollar, cocoa turns higher

* Improving Brazil crop outlook weighs on sugar

* ICE cocoa moves in an outside reversal

* Arabicas trade above a more than 2-1/2-year low

(New throughout, updates prices; adds trader comment, second byline/dateline)

NEW YORK/LONDON, Feb 21 (Reuters) - Raw sugar futures on ICE fell 1.5 percent in heavy dealings on Thursday, as a stronger dollar and swelling global supplies had investors selling futures, while cocoa bucked the downtrend in commodities and bounced up off an eight-month low.

Arabica coffee futures on ICE Futures U.S. were lower, hovering just above the lowest level in more than 2-1/2 years on abundant supplies.

The day after minutes of the latest Federal Reserve policy meeting raised doubts about U.S. economic stimulus, the euro hit a six-week low against the dollar, hurt by fresh evidence the euro zone economy is struggling.

The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities made up of 19 markets, dropped roughly 1 percent to a seven-week low as global equity markets also tumbled after European and U.S. data pointed to slow economic growth.

March raw sugar futures on ICE traded down 0.28 cent, or 1.5 percent, at 18.07 cents per lb by 12:38 p.m. EST (1738 GMT), after hitting 17.87 cents a lb a week ago, its lowest level since August 2010. Total volume reached around 110,000 lots, already well above the 250-day average at 96,832 lots, preliminary Thomson Reuters data showed.

"It's a macro 'risk-off' day," said Kona Haque, soft commodities analyst with Macquarie Bank, referring to the slide of the soft commodities complex.

"The commodities basket is suffering uncertainty over quantitative easing. Then European PMI data was also bearish for risk assets."

On Thursday, "flash" Purchasing Managers' Index (PMI) activity data for February, one of the earliest monthly indicators of economic activity, pointed to continued weakness in the euro zone, keeping alive risks of an interest rate cut by the European Central Bank in coming months.

The ICE March contract expires on Feb. 28. Total open interest dropped by more than 16,000 contracts, or 2 percent, on Feb. 20, ICE data showed, as dealers liquidate their positions, dealers said.

Nick Penney of brokers Sucden Financial Sugar said traders had become sensitive to availability of prompt or nearby sugars during the current inter-crop period in top producer Brazil.

"With availability of center-south Brazilian sugars lower than during the season, traders may be looking to absorb Central American or even Thai sugar and attract them to the tape (expiry)," Penney said.

Heavy supply prospects kept prices under pressure, with an improving crop outlook for Brazil.

The International Sugar Organization's (ISO) quarterly report forecast a global sugar surplus of 8.526 million tonnes in 2012/13, up from 6.479 million tonnes in 2011/12.

May white sugar on Liffe eased $4.00, or 0.8 percent, to $497.20 a tonne.

COCOA GOES AGAINST THE GRAIN

May cocoa futures on ICE closed up $20, or 1 percent, at $2,133 per tonne, changing direction in an outside reversal after falling to $2,102, the lowest for the second position since June 25, 2012.

May cocoa on Liffe also reversed earlier losses and rose 15 pounds, or 1.1 percent, to settle at 1,428 pounds a tonne, just above Tuesday's 10-month low of 1,403 pounds.

The U.S. market moved with the sterling against the dollar, which dropped to the lowest in more than 2-1/2 years and then turned higher.

"It's just been really a solid downtrend for the last week and there's a lack of sell-side volume down there," said one veteran U.S. dealer.

"You get the small specs here, do a little bit of covering and maybe some guys who had a little bit on the line did some buying."

This triggered some automatic buy orders as the market rose above the previous session's settlement, he said.

Ghana's cocoa main crop purchases hit 581,505 tonnes by Feb.7 since the season started Oct. 12, down 17.1 percent compared with the same period last year, data from industry regulator Cocobod showed on Thursday.

May arabica coffee futures on ICE fell 1.15 cents, or 0.8 percent, to $1.4050 per lb, above a more than 2-1/2 year low of $1.3760 per lb struck on Tuesday, with ample excess supply weighing on prices.

May robusta coffee futures on Liffe changed direction late in the session and settled up $6, or 0.3 percent, to finish at $2,069 a tonne, after trading as low as $2,043.

($1 = 0.6535 British pounds)

(Editing by William Hardy, James Jukwey and David Gregorio)