Cocoa futures on ICE extended their losses, falling more than 7 percent since Monday in their biggest four-day decline in four months and ending at a one-month low on follow-through selling.

Sugar was mixed.

The euro tumbled after the European Central Bank shifted away from further rises in interest rates, a key driver in the single currency's rally this year. Global stock markets fell sharply as the stakes intensified for the world's top finance officials to find ways to prevent Europe's debt crisis from worsening.

Arabica coffee futures were hit by a downside correction this week following a sustained advance, which saw prices climb last week to the highest level since May 9.

"I don't think it's necessarily a bearishness for coffee as it is a deep sense of macro nervousness seems to be creeping into the markets," said Sterling Smith, analyst for Country Hedging in Minnesota.

"There seems to be worry about bigger problems coming out of Europe, sooner rather than later, and fears of a widespread sell-off affecting a lot of things is creeping into the softs market."

The soaring US dollar, which hit a six-month high against a basket of major currencies, also pressured prices lower, dealers said.

December arabica coffee on ICE tumbled 15.2 cents, or 5.4 percent, to $2.6890 per lb by 12:45 a.m. EDT (1645 GMT), falling through the 100-day moving average around $2.6920 to a session low at $2.6510.

Arabica coffee's open interest soared to a three-month high of more than 115,000 lots by Sept. 8, while prices dropped as new shorts entered the market, dealers said.

Another bearish factor is heavy put buying of as far out as November 2012 around the $2.50-$2.60 level, which weighed on the market, Smith said.

Robusta coffee futures on Liffe eased with November closing down $48, or 2.2 percent, at $2,171 a tonne.

Cocoa futures on ICE also took a hit as the dollar strengthened while the sterling-denominated Liffe contract closed down a shade.

December futures on ICE dropped $38, or 1.3 percent, to finish at $2,873 a tonne, the weakest finish since Aug. 10, with dealers noting the market was still weighed down by a large global surplus in 2010/11 which has been widely estimated at mroe than 300,000 tonnes.

December cocoa futures on Liffe finished down 5 pounds at 1,856 pounds a tonne.

Raw sugar futures on ICE were mixed with the key spot contract firm, gathering momentum when key levels were breached and on renewed buying in the front month spreads in both New York and the whites market in London.

October raws were up 0.17 cent, or 0.6 percent, at 28.90 cents a lb after peaking at 29.43 cents, while the rest of the board was mixed.

"When it went through this week's high (which had been 29.07 cents) it ran a few stops," one dealer said, adding the market also broke above 10, 20, 40 and 50-day moving averages.

October whites on Liffe finished flat at $763.00 per tonne.

Copyright Reuters, 2011