* Prices pinned as dips stoke demand, investors skittish
* Trading volumes light as U.S. govt shutdown drags on
* China reserve buys down y/y as quality standards raised
NEW YORK, Oct 15 (Reuters) - Cotton futures eked out a gain for a third straight session on Tuesday, pinned in rangebound trade as price dips prompted buying but falling financial markets, a stronger dollar, and investor uncertainty pressured prices.
The most-active December cotton contract on ICE Futures U.S. edged up 0.10 cent, or 0.1 percent, to settle at 83.71 cents a lb.
Dips to the 83- to 84-cent level have rekindled demand that has been otherwise damped by high prices and competition from synthetic fibers.
Even so, fiber and other markets remained under pressure from continued uncertainty and mixed signals in the budget and debt talks in the United States.
U.S. stocks slipped and the Thomson Reuters-Jefferies CRB index, a benchmark for global commodities markets, fell.
The U.S. dollar gained against a basket of currencies, pressuring dollar-traded commodities, as it makes them pricier to holders of other currencies.
The continuation of a partial U.S. government shutdown has dented trading volumes and left the cotton market largely listless and awaiting direction, traders said.
Dealers have gone without weekly U.S. government export and crop progress reports since the start of the shutdown. On Friday, a monthly supply and demand report was notably absent.
"Without the government numbers, the market's reacting to whatever it can find and moving on outside markets. You have some buying when we come down to the level of physical demand," said a U.S. trader.
The government shutdown is expected to have hurt the U.S. economic recovery and has spurred speculation that the Federal Reserve will have to extend its stimulus program into next year.
The arrival of Northern Hemisphere's harvest has added seasonal pressure to cotton futures.
"We've got harvest pressure coming in, but we know that China continues to buy for inventories. Therefore, we're in this limbo," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, referring to a government stockpiling in top consumer China that has put a floor under global prices.
China purchased 193,030 tonnes of domestic cotton for state reserves in the past weeks. Beijing has purchased less than a third of the volume it bought at the same time last year, after raising quality requirements.
Traders have said that changes to the program could dent demand for lower-priced imports that has been otherwise voracious since Beijing launched the program in 2011.
The December contract's discount to March prices grew for another session to 0.98 cent a lb on Tuesday from 0.95 previously, as certified stocks continued to climb.
Exchange stocks reached 35,292 bales on Monday, with another 34,788 awaiting review by the U.S. Department of Agriculture, the latest ICE data showed.
The supply injection and expectations of more to come last week pushed the cotton market into a contango for the first time in four months, easing traders' concerns over tight U.S. supplies and warehousing costs. (Reporting by Chris Prentice; Editing by Marguerita Choy)