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GRAINS-Wheat rallies again as traders fret over U.S., French crops

* U.S. spring wheat ratings slipped again last week

* French heatwave stresses wheat in top EU producer

* CBOT wheat at 1-year top, MGEX at new 2-1/2 year high

* Corn hesitant after slide, soybeans down slightly

(Updates with European trading, changes byline/dateline) PARIS/SINGAPORE, June 20 (Reuters) - U.S. and European wheat futures rose sharply on Tuesday, hitting their highest levels in at least a year, as a further decline in U.S. spring wheat conditions surprised traders and coincided with concern about a damage to French wheat from a heatwave. The Chicago Board of Trade most-active wheat contract was up 0.7 percent at $4.70-1/4 a bushel by 1159 GMT, after earlier reaching a one-year high of $4.74-3/4. The rally was driven by Minneapolis Grain Exchange (MGEX) spring wheat futures, on which spot prices added as much as 2.7 percent to set a new 2-1/2 year high of $6.57 a bushel. In a weekly report released after Monday's market close, the U.S. Department of Agriculture (USDA) rated 41 percent of the U.S. spring wheat crop as good-to-excellent, down from 45 percent a week earlier, confounding expectations of an improvement after recent rain in the dry northern Plains. "The crop condition report is supportive for wheat prices," said one Australia-based agricultural commodities analyst. "We are in a weather market for wheat but a lot of bad weather news has already been priced into the market." Concern over deteriorating harvest prospects in the United States has been reinforced by sweltering temperatures in western Europe, particularly in France, the European Union's top wheat grower. December milling wheat, the most active contract on Paris-based Euronext, set a new high since last July, reaching 183.00 euros a tonne, before giving up its gains to trade flat on the day at 180.75 euros. "This (heatwave) increases the risk of yield losses, which would reduce the amount by which it was hoped that the (EU) crop would exceed last years disappointing crop," Commerzbank analysts said in a note. Temperatures across France were forecast to reach the mid-30s Celsius, or in the 90s Fahrenheit, before easing on Friday. However, a favourable crop outlook in the Black Sea region, along with high global wheat inventories, could cap further gains, and wheat futures gave up much of their earlier gains towards the end of the overnight session. The most active CBOT corn contract was down 0.1 percent at $3.75 a bushel, while soybeans inched down 0.2 percent to $9.35-1/2. After a sharp fall on Monday, corn drew some support from wheat and also from the USDA crop report which showed an unchanged good/excellent rating for corn, below analysts' average estimate of a 1 point improvement. But the market remained under pressure from a favourable weather outlook in the Midwest crop belt as the crop nears pollination, a crucial yield-determining phase that usually occurs in July. Soybean prices were also curbed by reasonable crop conditions, although the USDA report showed a smaller than expected improvement last week.

Prices at 1159 GMT

Last Change Pct End Ytd Pct Move 2016 Move CBOT wheat 470.25 3.25 0.70 408.00 15.26 CBOT corn 375.00 -0.25 -0.07 352.00 6.53 CBOT soy 935.50 -2.25 -0.24 1004.00 -6.82 Paris MAT wheat Sep 177.50 0.00 0.00 168.00 5.65 Paris maize Jun 177.50 1.75 1.00 166.00 6.93 Paris rape Aug 363.25 -3.00 -0.82 408.50 -11.08 WTI crude oil 43.04 -1.16 -2.62 53.72 -19.88 Euro/dlr 1.11 0.00 -0.01

Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne

(Reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; Editing by Richard Pullin and Susan Thomas)