Feb 21 (Reuters) - ICE cotton prices hovered near a two-week low on Friday, despite a robust federal weekly export sales report, as downbeat sentiment in the wider financial market weighed on the natural fiber.

* Cotton contracts for May CTc2 extended losses for the third straight session and eased 0.1 cent, or 0.15%, at 67.37 cents per lb at 11:09 a.m. ET (1609 GMT). The contract is set for a 1.4% weekly decline.

* "The stock market had a pretty good correction since yesterday, we've seen the Dow drop 800 to 900 points since Wednesday. The dollar is up a little bit today," said Jim Nunn, owner of Tennessee-based cotton brokerage Nunn Cotton.

* The U.S. dollar index .DXY was up 0.3%, making greenback-priced cotton more expensive for overseas buyers.

* Wall Street's main indexes moved lower, as investors assessed latest economic data including a weak consumer sentiment reading, while the blue-chip Dow suffered its steepest loss on a drag by UnitedHealth. .N

* The United States Department of Agriculture's report on Friday showed export sales of upland cotton rose 14% to 298,300 running bales (RB) from the previous week and 39% from the prior four-week average.

* Net sales of upland cotton totaling 312,500 RB for 2024/2025 rose 28% from the previous week and 18% from the prior four-week average.

(Reporting by Noel John in Bengaluru; Editing by Shailesh Kuber)

((Noel.John@thomsonreuters.com;))