SOFTS-Coffee and cocoa hold firm, sugar reverses lower

* Producer selling overhangs the sugar market

* Arabica coffee strengthens on firm equities

(Writes through with U.S. comment and closing prices for ICE markets, adds byline, dateline)

NEW YORK/LONDON, March 23 - Coffee and cocoa futures rose on Monday, with a lift from rallying equity markets sparked by U.S. plans to ease its economic crisis, renewing concerns about inflation.

Sugar futures eased in consolidation as market participants grabbed profits following last week's gains and producer selling capped the market.

"What can certainly be taken from the last several days of strong commodity performance is the sharp appreciation we can expect from sustained positive economic news," fund manager Matthew Sena of Castlestone Management said.

Sena said shortages in supply would also become apparent when growth and demand returned and there was a long-term consensus commodities would perform well when the economy started rolling again.

"All of these things add up to a positive story and this sense of optimism last week and this week is helping the market feel it has found a bottom," he added.

Arabica coffee futures on ICE rose with May closing up 1.30 cents at $1.1750 per lb. May set a contract low of $1.0435 only two weeks ago.

Robusta coffee futures in London also rose with May ending $22 higher at $1,582 a tonne.

"I think there are more fundamental reasons why arabicas should rise. There still seem to be concerns about the milds," one dealer said.

A drop in production in Colombia and some Central American countries had helped to tighten supplies of high-quality arabicas.

Short-covering and spillover support from firm stock markets, amid light origin selling, helped arabica futures to climb, said Rodrigo Costa, vice-president Institutional Sales for Newedge USA in New York.

Dealers said robusta market fundamentals appeared more bearish although the market was underpinned by uncertainty about the availability of deliverable supplies.

"I think people would be expecting the market to be lower than it is at the moment but the bulk of stocks are in strong hands and we are not quite sure what they are going to do with it," one robusta dealer said.

COCOA CLIMBS

Cocoa prices on ICE rose with May settled $8 higher at $2,593 a tonne. The contract had earlier risen to $2,624, its highest in five weeks.

A stronger pound capped prices in London with May ending 1 pound higher at 1,922 pounds a tonne.

Sugar futures were reversed lower, failing to react positively to a rise in the crude oil market. Sugar is used to produce biofuel ethanol in Brazil and its price often tracks energy markets.

"Producers were the ones capping the market today, selling the rally and we didn't have enough funds just to hold it," Costa said.

May raws on ICE closed down 0.13 cent at 13.41 cents a lb, well below the day's peak of 13.67 cents.

Dealers said reduced crop prospects in India and the prospect of substantial imports had contributed to the sharp advance in prices.

White sugar futures were also easier with May ending $1.60 lower at $406.20 per tonne.