* Spot raw sugar still technically overbought

* White sugar prices near highest since February

* Traders eye dry weather in parts of Brazil coffee belt (Adds comment, NEW YORK dateline, byline; updates prices)

By Marcy Nicholson and David Brough

NEW YORK/LONDON, Oct 6 (Reuters) - ICE raw sugar futures steadied after nearing a seven-month peak on Tuesday, with gains from a two-week rally capped by risks that India could renew export subsidies, though prices remained in technically overbought territory.

Arabica coffee rose but traded quietly within the prior session's range, while cocoa inched lower.

March raw sugar settled down 0.01 cent, or 0.1 percent, at 13.63 cents per lb, after hitting 13.67 cents, equaling Monday's highest level since March 2.

Sugar futures rallied sharply last week on expectations of robust demand for Brazilian cane-based ethanol after a gasoline price increase, and wet weather complicating cane harvesting.

"We estimate the net long position carried by non-index funds and specs to be over 50,000 lots at this point," said Nick Penney, a senior trader with Sucden Financial Sugar.

"Whilst there is plenty of room to add to these, further bullish news needs to emerge to justify this."

Risks that India, the No. 2 sugar producer after Brazil, could renew export subsidies, potentially increasing global supplies, capped the upside in futures prices, traders said.

"A rally to 17 cents a pound should logically see Indian sugar come out as exports unsubsidized," said Tom McNeill, a director of analysts Green Pool.

"I don't know that anyone is forecasting this rally to go to 17 cents a pound though."

ICE December white sugar settled down 90 cents, or 0.2 percent, at $385.90 per tonne, having on Monday touched $388.00 per tonne, the highest since Feb. 20.

Arabica coffee futures rose but remained below Monday's six-week high as traders continued to keep a cautious eye on dry weather in some of top producer Brazil's growing regions. Rain is needed to ensure crop flowering.

December arabica coffee settled up 0.55 cent, or 0.4 percent, at $1.281 per lb, after jumping 4.3 percent on Monday to $1.2965, the highest since late August.

ICE November robusta coffee settled down $9, or 0.6 percent, at $1,600 per tonne.

London December cocoa finished down 6 pounds, or 0.3 percent, at 2,120 pounds a tonne, having touched a one-month low of 2,112 pounds, basis front month, on Monday.

New York December cocoa closed unchanged at $3,092 per tonne, after touching a five-week low at $3,069 on Monday. (Editing by David Evans, Adrian Croft and Richard Chang)