* U.S. jobless claims data points to stronger recovery
    * Malaysia weather office issues heavy rain warning
    * Trading volume thin ahead of long weekend

24/12/2011 (Reuters) - Malaysian crude palm oil futures climbed to a near three-week high on Friday on shortcovering ahead of the weekend that was driven by upbeat U.S. data and prospects of lower output triggered by heavy rain fall in parts of Malaysia.

New claims for unemployment benefit in the U.S. dropped to their lowest in 3-1/2 years, bolstering views that the recovery is gaining momentum and adding cheer to global financial markets.

Despite closing higher for the past few days, palm oil has lost nearly 17 percent this year and is on course for the first annual decline since 2008 thanks to concerns over the euro zone debt crisis stalling growth and commodity demand.

"The market has been compressed for too long at 2,890 to 3,030 ringgit. The intraday has been heavily overbought and I don't think it can sustain this kind off rally," said a trader with a local brokerage.

Benchmark March palm oil futures settled up 2.4 percent on the Bursa Malaysia Derivatives Exchange to 3,170 ringgit ($1,000)per tonne. It earlier touched a high of 3,178 ringgit, a level last seen on Nov 23.

Traded volumes for palm oil futures were thin ahead of a long Christmas weekend at 18,668 lots of 25 tonnes each, compared to the usual 25,000 lots.

"It is still weather play and the market's tracking stronger soyoil. The charts are also bullish as the market settled at day's high for 4 days continuously," said another dealer with a foreign commodities brokerage.

The Malaysian Meteorological Department has issued warning of heavy rains that may cause floods over low-lying areas in key oil palm growing states of Pahang, Johor, Sabah and Sarawak, together accounting for almost 75 percent of Malaysia's palm oil output.

Heavy rains may cause logistics disruption if they worsen as floods hitting oil palm estates may cut access roads to plantations.

But palm oil stocks may get a little breathing space as exports from Malaysia are also falling, cargo surveyor data showed this week.

Oil held around $108 a barrel on Friday, supported by fresh signs of a strengthening U.S. economy and concern of potential supply disruptions in Iran and Iraq.

U.S. soyoil for January delivery edged higher as concern over dry weather hurting South American soy yields supported the market. The most active Sept 2012 soyoil contract on China's Dalian commodity exchange gained 0.7 percent.

  Palm, soy and crude oil prices at 1007 GMT
                                                                              
  Contract                Month        Last   Change     Low    High       Volume
  MY PALM OIL           JAN2      3160   +65.00     3125    3160          93
  MY PALM OIL           FEB2     3175   +75.00     3115    3182       3959
  MY PALM OIL           MAR2    3170   +73.00     3112    3178     10775
  CHINA PALM OLEIN MAY2     7936   +66.00     7900    7956     79670
  CHINA SOYOIL         SEP2     8930   +62.00     8892    8948   255240
  CBOT SOY OIL        JAN2      50.64    +0.19     50.14   50.64      2486
  NYMEX CRUDE        FEB2     99.77    +0.24     99.24  100.23     7944
                                                                              
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
  ($1 = 3.1665 ringgit)