* Disappointing U.S. factory data weighs
* Open interest sinks as investors race to sidelines
* Exchange stocks climb to highest since early December
NEW YORK, Feb 3 (Reuters) - ICE cotton fell on Monday as exchange supplies continued to climb and as weaker-than-expected U.S. factory activity and continued emerging-market worries drove equities and industrial commodities lower.
The benchmark March cotton contract on ICE Futures U.S. finished down 0.82 cent, nearly 1 percent, at 85.01 cents a lb.
Disappointing factory data in the United States for January and slowing growth in China's goods-producing sectors kept pressure on global markets.
Emerging market stocks extended a two-week slide as worries about growth and stability heightened, threatening demand for cotton in key markets such as China and Turkey.
Cotton prices dropped last week as open interest also fell, seen as evidence of long liquidation.
Total market open interest was 179,072 lots on Friday, down by 9,566 lots from a week earlier, the most recent ICE data showed on Monday.
Fiber slightly underperformed the broader commodities sector, as 10 of 19 components of the benchmark Thomson Reuters/Core Commodity CRB index gained.
Exchange inventories ticked up to 168,300 bales, up from 158,200 bales previously and about 34,100 bales a month ago, the most recent ICE data compiled by Reuters showed.
They have climbed to the highest since early December, as dealers in the United States have harvested and processed a late crop.
"There's been selling because of what's happening in the stock market. There's a lot of fear out there," said Keith Brown, principal at broker Keith Brown and Co.
The start of the New Year's holiday in top consumer China has slowed demand, he added.
Demand for U.S. cotton has been strong despite high prices, sparking worry over tight supplies in the world's top exporter.
During the day's trade, the March contract opened near its 14-day moving average of 85.93 and closed below it. (Reporting by Chris Prentice; Editing by Peter Galloway)