* Raw sugar futures recover from most oversold condition since 1982
* Vietnam robusta beans sold at discount to London futures
* ICE arabica coffee drops the most in 2 weeks
(New throughout, updates prices; adds byline, NEW YORK dateline)
NEW YORK/LONDON, Dec 19 (Reuters) - ICE raw sugar jumped on Thursday, recovering from the previous day's 3-1/2 year low as a technically oversold condition drove buying.
Expectations of renewed supply flows from top robusta coffee producers weighed on the Liffe robusta coffee market and pressured ICE arabica coffee to its biggest one-day rout in two weeks.
Cocoa futures advanced in rangebound trade, underpinned by deficit expectations and drawing support from the U.S. Federal Reserve's decision to scale back bond purchases.
The Fed decision sent global stock markets higher, though U.S. equity averages retreated Thursday afternoon after touching record levels as doubts emerged over the Fed's commitment to keep record low interest rates in place.
March raw sugar futures on ICE Futures U.S. rallied 0.26 cent, or 1.6 percent, to close at 16.15 cents a lb as sharply oversold conditions and low prices drove buying.
The front-month on Wednesday sank to 15.86 cents, the lowest level since July 2010, and its 14-day relative strength index fell to the lowest level since 1982.
"You're seeing a mix of end-user buying down here, short-covering, and the macro funds might be bottom-picking," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors.
Further, Indonesia's demand for raw sugar could help absorb excess supply in the global market as No. 2 producer India moves to aid the country's struggling millers.
India's cabinet will consider interest-free loans to sugar mills to help them pay government-set rates to cane growers at a time when sugar prices have fallen, a move that would support production in the face of falling global prices.
March white sugar on Liffe closed up $5.40, or 1.2 percent, at $438.80 per tonne, after dipping to $432.10 on Wednesday, the lowest level for the front month since May 2010.
The whites-over-raws sugar premium, a measure of refining profitability, has been subdued for months but looks set to rebound as buyers take advantage of multi-year price lows.
ROBUSTA COFFEE SLIDES
Liffe March robusta coffee fell $15, or 0.9 percent, to finish at $1,684 a tonne, on expectations of supply movement in Vietnam.
Robusta beans in the top grower changed hands below London futures this week for the first time since February.
Robusta prices are expected to slide after being one of the best performing commodities in recent weeks, analysts said. The recent price recovery came as growers held back supplies of a bumper crop.
"We're seeing cash coffee trading at a discount to the exchange, an indication of supplies moving," said Sterling Smith, a futures specialist with Citigroup in Chicago.
Dealers said arabica coffee prices had derived support from the strength of the robusta market and now appeared overvalued given more than ample supplies and the prospect of a huge crop in top producer Brazil next year.
London's recent slide weighed on the New York coffee market, and March arabica futures on ICE finished down 2.2 cents, or 1.9 percent, at $1.1375 per lb as sell stops fueled losses.
In cocoa, May futures on Liffe finished up 5 pounds, or 0.3 percent, at 1,766 pounds a tonne, entrenched inside its the range of 1,711 pounds to 1,788 pounds in which it has traded for over a month.
The London market was in backwardation, meaning nearby contracts traded at premiums to later dated contracts, indicating expectations of tightening supply.
ICE March cocoa rose $21, or 0.8 percent, to settle at $2,791 a tonne.
Deficit concerns have underpinned prices, even as the recent high port arrivals in top grower Ivory Coast, a sign of supply flow, have kept a lid on further gains.
(Editing by William Hardy, Marguerita Choy and Meredith Mazzilli)