* Euro zone concerns heightened as Spain may be unable to avoid bailout * Prices touch low of 2,969 ringgit, lowest since June 22 * Weak exports, higher output contribute to weak sentiment (Updates prices, milestones) By Chew Yee Kiat SINGAPORE, July 23 (Reuters) - Malaysian crude palm oil futures dropped to the lowest in more than a month on Monday, tracking broader financial market weakness on fresh concern over Spain's ability to avoid a costly bailout that could worsen the euro zone debt crisis. Risky financial assets including crude oil and grains futures suffered declines as investors liquidated their positions on concern that the debt crisis could stall global growth and damp fuel and food demand. Half a dozen local governments were ready to follow in the footsteps of Valencia, which on Friday said it would need help from Madrid, Spanish local media reported. Relentless heat in the U.S. grain belt continued to destroy soybean crops and tighten soybean oil supply, but analysts said investors took cues from macroeconomic factors instead. "It's been two weeks that we've been talking about the U.S. weather, so the weather risk has already been factored in unless we hear something new coming from El Nino," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore. "There's news about Valencia seeking a bailout that has pushed Spanish bond yields to new high and that could weigh on the market." The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 1.7 percent to close at 2,990 ringgit ($943) per tonne. Prices earlier touched a low at 2,969 ringgit, the lowest since June 22. Traded volume stood at 27,369 lots of 25 tonnes each, higher than the usual 25,000 lots. Traders said the weak sentiment was due in part to slow exports and higher production in No.2 producer Malaysia, which could boost palm oil stocks after they fell to a 14-month low in June. Malaysia's palm oil exports fell 23 percent over the July 1-20 period from a month earlier, said cargo surveyors Intertek Testing Services and Societe Generale de Surveillance. Exports to China slowed by more than half for the period on high stockpiles and a slowdown in demand after China's economy showed signs of slowing, said a Singapore-based trader. But the market is also watching for signs of El Nino returning to Southeast Asia as the hot and dry weather could hurt palm oil output for top producers Indonesia and Malaysia. In other markets, crude oil prices slipped towards $103 per barrel on Monday as investors sold off riskier assets and fled for the perceived safety of the dollar on fears that Spain will be unable to avoid a costly sovereign bailout. Concern over the euro zone debt crisis also weighed on other vegetable oil markets. By 1005 GMT, the most active U.S. soyoil for December delivery was down 1.7 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 2.2 percent. Palm, soy and crude oil prices at 1006 GMT Contract Month Last Change Low High Volume MY PALM OIL AUG2 2962 -48.00 2950 2980 375 MY PALM OIL SEP2 2976 -49.00 2956 3009 3664 MY PALM OIL OCT2 2990 -52.00 2969 3008 17100 CHINA PALM OLEIN JAN3 7882 -192.00 7876 8000 260188 CHINA SOYOIL JAN3 9630 -212.00 9626 9766 420580 CBOT SOY OIL DEC2 54.22 -0.96 54.17 55.29 10050 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

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