EU wheat at one-week high on short-covering

PARIS, July 3 (Reuters) - European wheat futures rose on Thursday to a one-week high as an easing in the euro and short-covering ahead of a U.S. holiday weekend helped prices recover from contract lows.

Gains were moderate with expectations of a large European wheat harvest and concerns over slow export demand lingering.

September wheat BL2U5 settled 0.8% up at 197.25 euros ($231.61) per metric ton. It earlier rose to its highest since June 25 at 199.25 euros but held below the psychological 200 euros threshold.

The run-up to Friday's U.S. market closure for the Independence Day holiday was encouraging investors to adjust their large short positions in Euronext wheat, traders said.

A fall for the euro EUR=, which was easing from a 3-1/2 year high against the dollar this week, also helped September futures move away from Tuesday's contract low of 192.75 euros.

"Despite short-term stabilisation and minor support from short-covering, the broader sentiment remains negative, with global supply strength and a strong euro weighing heavily on European prices in particular," British merchant ADM Agriculture said in a note.

Traders and analysts remained optimistic about Europe's wheat harvest that was underway, with a heatwave in recent days seen posing few risks to crops.

“There is debate about whether Euronext can revisit the 200 euro level. But the good harvests shaping up in west Europe and the Black Sea along with thin import demand are still likely to provide downward pressure,” a German trader said.

Freight shipping on the river Mosel in west Germany, called the Moselle in France, has been blocked after an accident that damaged a lock.

The river is an important route for grains and rapeseed between Germany and France, and the closure could cause logistical headaches as crops arrive from the harvest.

A similar incident on the Mosel in December that halted shipping led Euronext to suspend physical delivery to river ports in eastern France for its rapeseed futures.

Traders said they were waiting to see how long repairs will take, with authorities yet to estimate the duration of the closure.

August rapeseed COMG5 settled 1.7% lower at 461.00 euros a ton, near a two-month low struck earlier this week.

Dealers said prices were pressured by profit-taking in vegetable oil markets after a rally, as well as reports of good yields in the European rapeseed harvest that is in progress.

($1 = 0.8516 euros)