29/05/2012 (Reuters) - Malaysian palm oil futures rose to a near two-week high on Monday, as investor worries about the euro zone debt crisis eased and demand showed signs of improving ahead of the Muslim fasting month of Ramadan in July. 

European stocks rose for a third straight session on Monday and the euro edged up, as Greek polls showed growing support for pro-bailout parties, yet Spain's debt yields hit a record high as the government worked on plan to fund troubled lender Bankia.

The benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange ended 0.5 percent higher at 3,144 ringgit ($1,000) per tonne. Prices have slipped about 9 percent this month.

Traded volumes stood at 14,730 lots of 25 tonnes each, compared to Friday's total at 21,931 lots.

"Euro zone concerns and macro fears are easing," said a Kuala Lumpur-based trader. "Demand is also a tad better."

After peaking at 3,158 ringgit on Monday, traders said prices could peak at about 3,200 ringgit by the end of this month.

Last week, a failure by European policymakers to make any significant breakthrough in resolving the debt crisis weighed on palm prices, sending the benchmark down to its lowest level this year at 2,993 ringgit per tonne.

Palm oil will end its current rebound around resistance at 3,192 ringgit as indicated by a Fibonacci retracement analysis and a falling channel, said Reuters market analyst Wang Tao based on technical analysis.

"Not much news in the market to move the price in a big way," said a second Kuala Lumpur-based trader. "Just a technical rebound -- markets are oversold.

My guess is the down side is not over yet ... it's too early to say the market has bottomed out."

Also offering support to palm was crude oil, which edged above $107 per barrel on euro zone hopes and the lack of progress in talks over Iran's nuclear programme.

The demand outlook was still uncertain however, and traders were looking for more news on Europe.

"In the 19th century we were worried about their invasion," the Kuala Lumpur trader said on Europe. "Today we're worried about their economies." 

Another positive for edible oils was an upturn in demand from India and Pakistan for Ramadan, where fasting in the day is followed by feasting in the evening.

"It is fair for the market to go higher, after being heavily oversold," said a Jakarta-based trader. "Fundamentals are still supportive - production is not really high and demand not too bad. 

"Only the macro picture was behind the recent downtrend." Data last week showed that palm oil exports rose slightly in May.

Investors are also keeping a close eye on weather patterns, where dry conditions in the United States could hurt the soybean crop, and a possible return of the El Nino weather pattern that may curb palm oil output in Southeast Asia.  

U.S. markets will be closed most of Monday for the U.S.Memorial Day holiday.

In other vegetable oil markets, the most active Dalian soyoil September contract rose 1 percent. 

     Palm, soy and crude oil prices at 1032 GMT 

  Contract        Month    Last   Change     Low    High  Volume         
  M'ASIA PALM OIL  JUN2    3120   +20.00    3120    3139     352         
  M'ASIA PALM OIL  JUL2    3147   +17.00    3133    3158    2419         
  M'ASIA PALM OIL  AUG2    3144   +14.00    3129    3158   14730         
  M'ASIA PALM OIL  SEP2    3136   +13.00    3123    3152    4317         
  DALIAN SOY OIL   SEP2    9196   +94.00    9148    9214  176128         
  CBOT SOY OIL     JUL2   50.15    +0.00    0.00    0.00       0         
  NYMEX CRUDE      JUL2   91.81    +0.95   90.95   91.99   11746          
  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 = 3.1530 Malaysian ringgits)