Jan 10 (Reuters) - ICE cotton futures fell on Friday, dragged down by higher U.S. dollar and downbeat sentiment in equities after a stronger-than-expected U.S. employment data, while market awaited a federal monthly supply-demand report.

* Cotton contracts for March CTc1 fell 0.26 cent, or 0.38%, to 68.24 cents per lb at 11:01 a.m. ET(1601 GMT).

* "Speculative selling came back in the morning on the back of a rising U.S. dollar index, which was nearly up 0.7% after a strong U.S. jobs report, treasury yields are up, and Wall Street's main indices continued sliding," said Valentin Olah, risk management consultant at StoneX Group.

* The dollar rallied, while U.S. stocks fell sharply on Friday after data showed the U.S. economy created far more jobs in December than expected, reinforcing the belief among investors that U.S. interest rates may not fall much this year. MKTS/GLOB

* A stronger U.S. dollar makes cotton more expensive for overseas buyers.

* The United States Department of Agriculture's (USDA) weekly export sales report showed net sales of upland cotton totaling 137,400 running bales (RB) for 2024/2025, up 7% from the previous week but down 27% from the prior four-week average. EXP/COT

* The report further showed the export sales of upland cotton at 191,700 RB, a marketing-year high, up 66 percent from the previous week and 47 percent from the prior four-week average.

* Investors now await the USDA's World Agricultural Supply and Demand Estimates (WASDE) report due at 12:00 p.m. ET to for further insights into the market.

(Reporting by Anmol Choubey in Bengaluru; Editing by Shreya Biswas)

((anmol.choubey@thomsonreuters.com;))