* CPO's discount to soyoil has widened to $220 a tonne-trader * Likely to shift orders to palm oil with its still ample stocks By Niluksi Koswanage KUALA LUMPUR, Sept 8 (Reuters) - Malaysian palm oil futures extended gains for a second day on Thursday, as the tropical oil's discount to competing soyoil has widened due to dry weather curbing U.S soybean yields. That could shift demand to palm oil and support the market that has fallen almost a fifth so far this year on concerns the euro zone debt could stall global economic growth. Prices also drew support from market views that Malaysian palm oil stocks in August likely fell for a second-straight month as exports and local demand outstrip sluggish production during a key Muslim festival. "The market driving support purely from the fact that crude palm oil is at a $220 discount to soyoil," said a trader with a foreign commodities brokerage. "That spells an opportunity for palm oil to grab some share as stocks are still ample despite the a recent draw down." By midday, benchmark November palm oil FCPOc3 on the Bursa Malaysia Derivatives Exchange rose 0.7 percent to 3,064 ringgit ($1,027.15) per tonne. Exchange volumes stood at 6,239 lots at 25 tonnes each versus the usual 12,500 lots with trading interest muted after last week's long holidays. Reuters technical analyst Wang Tao said Malaysian palm oil FCPOc3 will rebound to the 3,119 ring per tonne level as a "morning star" formed on the daily candlesticks chart. Brent crude held steady above $115 a barrel, after a $3 surge in the previous session, in line with a rebound in equity markets as a ruling by a top German court helped assuage fears that euro zone bailout efforts might get stalled. Other vegetable oil markets were muted ahead of the U.S. Department of Agriculture's supply-demand report on Monday, which will update the agency's crop forecasts for soybeans that have suffered from the hot and dry weather. U.S. soyoil for October delivery fell 0.05 percent in Asian trade. The most active May 2012 soy oil on China's Dalai Commodity Exchange gained 0.4 percent. Palm, soy and crude oil prices at 0539 GMT Contract Month Last Change Low High Volume Ma's PALM OIL SEP1 3146 +6.00 3138 3155 11 Ma's PALM OIL OCT1 3107 +18.00 3075 3116 238 Ma's PALM OIL NOV1 3064 +22.00 3025 3076 3550 Ma's PALM OIL DEC1 3054 +23.00 3020 3065 997 DALAI SOY OIL MAY2 10470 +36.00 10416 10488 338556 CLOT SOY OIL DEC1 58.63 -0.05 58.36 58.78 47 NYMEX CRUDE OCT1 89.63 +0.29 89.29 90.11 5922 Palm oil prices in Malaysian ring per tonne CLOT soy oil in U.S. cents per pound Dalai soy oil in Chinese guan per tonne Crude in U.S. dollars per barrel ($1 = 2.983 Malaysian Ringgit) (Editing by Himani Sarkar) ((niki.koswanage@thomsonreuters.com)(+603 2333 8035)(Reuters Messaging:)(niki.koswanage.thomsonreuters.com@thomsonreuters.net

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