* Euro zone debt worries linger * Wet weather in coming months seen supporting palm prices * Benchmark prices fall 0.7 pct to touch 3,157 ringgit low By Michael Taylor JAKARTA, Nov 16 (Reuters) - Malaysian palm oil futures dipped on Wednesday as investors booked profits after recent gains and ongoing euro zone concerns held prices back, although lower output expectations are seen pushing the edible oil higher in the coming weeks. Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange traded 0.2 percent lower at 3,172 Malaysian ringgit ($1,005) per tonne. On Tuesday prices touched a peak at 3,209 ringgit, a level not seen since June 22. Traded volumes for the January palm contract were at 5,091 lots of 25 tonnes each, compared with a more than one-month high at 17,076 lots on Tuesday. "The market is in quite a tight range," said a Kuala Lumpur-based palm trader. "There is a bit of profit-taking coming in, while the Dalian is also weak ... the sovereign debt issue is still lingering but there is no panic." "We are moving into the monsoon season, and the expectations are that it will be worse than last year," he added. "A lot of people are worried on the plantations." Asian shares and the euro fell as signs that rising borrowing costs were affecting AAA-rated France stirred fears that even core euro zone members may not escape contagion from the region's debt crisis. In related markets, Brent crude slipped below $112, reversing some of the previous session's gains on worries that new governments in Greece and Italy may fail to muster political clout to impose unpopular reforms. U.S. soyoil for December delivery slipped by about 1 percent in Asian trade, while China's most active May 2012 soybean oil contract <0#DBY:> also fell. A bearish target of 3,100 ringgit for palm oil is unchanged, as indicated by its wave pattern and a rising channel, Reuters market analyst Wang Tao said. Benchmark palm prices have fallen about 16 percent this year, partly due to the uncertain macro and sovereign debt picture and demand outlook. Prices have however, gained 15 percent since lows hit in early October. Underlying palm oil sentiment is improving due to lower production expectations from the fourth quarter, as dominant Southeast Asian producers enter the rainy season and the La Nina weather pattern is seen returning. But there is far from a consensus among analysts. "Palm oil has been turning up quite strongly, back to around the 3,200 level," said John Rachmat, a Singapore-based analyst at Royal Bank of Scotland. "I'm not entirely sure about the current state of play." "It is a mistake to be going very bullish at this stage ... a lot of talk in the market about the La Nina effect, has not occurred in Indonesia," he added. "When I ask planters in Indonesia, they are not seeing any excessive rainfall." At the same time, palm oil demand is seen rising in top buyers India and China. Exports of Malaysian palm oil products for Nov 1-15 rose, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said earlier this week. Rising populations and higher incomes are likely to send vegetable oil demand soaring in top palm buyer India, a trade body said late on Tuesday. Palm, soy and crude oil prices at 0559 GMT Contract Month Last Change Low High Volume M'ASIA PALM OIL DEC1 3180 -4.00 3170 3185 469 M'ASIA PALM OIL JAN2 3173 -3.00 3160 3185 3982 M'ASIA PALM OIL FEB2 3172 -6.00 3157 3181 5091 M'ASIA PALM OIL MAR2 3172 -6.00 3157 3176 456 DALIAN SOY OIL MAY2 9202 +0.00 9188 9318 224382 CBOT SOY OIL DEC1 51.98 -0.62 51.91 52.65 6162 NYMEX CRUDE DEC1 98.61 -0.76 98.42 99.37 7564 Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. cents per pound Dalian soy oil in Chinese yuan per tonne Crude in U.S. dollars per barrel ($1 = 3.154 ringgit)

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