Cotton ekes out further gains on short-covering

* Open interest falls for first time in almost two weeks

* Prices settle close to intraday high

* Chinese imports seen halving in 2012/13 - ICAC

NEW YORK, Oct 2 (Reuters) - Cotton prices rose for a second day on Tuesday as the market consolidated within recent ranges and on a flurry of short-covering after selling pressure in the run-up to the quarter's end last week.

After hitting its high for the day at 71.92 cents, New York cotton for December delivery

settled up 0.91 percent at 71.85 cents per lb on ICE Futures U.S.

March's premium to the nearby price has increased in recent weeks due to pressure on the benchmark contract. It was as high as 1 cent on Monday, its loftiest in almost two months, before narrowing slightly to 0.84 cent on Tuesday.

Open interest dropped by 904 lots on Monday, its first fall in almost two weeks, reflecting a brief spell of short covering. That took the total to 189,650 lots.

The weaker dollar also buoyed prices, although gains were minimal and volumes low. Just under 12,000 December lots changed hands on Tuesday, well below recent trading sessions, with investors hoping for direction from China, the world's largest textile market, after the country's week-long holiday.

Beijing's strategic reserve is expected to replenish its stockpile after the break after offloading some fibers last month, analysts said.

That may not be enough to offset the otherwise bleak outlook heading into the northern hemisphere harvest, though.

Compounding that outlook was a report by the International Cotton Advisory Committee (ICAC), an association of governments of cotton producing, consuming and trading countries, which forecast that Chinese imports would halve in the current season to end-July 2013, slowing the voracious buying seen last year.

That in part reflects a slower pace of purchasing for the strategic reserve as well as slack demand from the textile industry, which has been hurt by high domestic fiber prices.

The ICAC said local prices in China will continue to be elevated compared with the rest of the world due to the government's minimum support price policy, under which the strategic reserve is expected to make daily purchases of new crop between September and March next year aimed at helping farmers.

Those prices, which have forced some textile mills to switch to lower-priced manmade fibers, contrast starkly with the futures prices, which the ICAC said it expects to remain under pressure.

"In the rest of the world, the pressure of accumulating stocks, combined with weak demand, could drive cotton prices down," it said in a statement.

The downbeat assessment of the market echoed forecasts by the U.S. Department of Agriculture of record stocks due to lower demand and higher output.

Even so, fibers bucked the downward trend in the broader financial markets. Grains extended recent losses and equities eased amid expectations that debt-laden Spain is getting close to requesting a financial bailout from the euro zone.

The Thomson Reuters-Jefferies CRB index

, a global benchmark for commodities, eked out a gain of 0.07 percent.

(Reporting by Josephine Mason; editing by Jim Marshall)