* Palm touches 2,222 rgt/tonne as moves from recent lows

* Rallies in U.S. soybean oil, Chinese refined palm

* Potential Indonesian CPO tax move to help downstream

Malaysian palm oil futures edged further away from seven-week lows on Thursday as

the U.S. dollar's slide inspired a rally in overseas vegetable oil markets.

The dollar suffered its biggest one-day fall in six years

after the Federal Reserve signalled a slower pace of interest

rate increases, which in turn boosted prices of commodities from

oil to soybeans to gold.

The benchmark June contract on the Bursa Malaysia

Derivatives edged up 0.6 percent to 2,206 ringgit ($596) a tonne

by Thursday's close. Prices were choppy, trading between 2,222

ringgit, the highest since March 13, and 2,165 ringgit.

The U.S. soyoil contract for May was up 0.5 percent

in late Asian trade, while the most active September soybean oil

contract on the Dalian Commodity Exchange climbed 1.6

percent. Dalian RBD palm oil futures for September

surged nearly 4 percent to 4,774 yuan ($771) a tonne.

"There's bargain buying and short covering as the dollar

sinks," said one Malaysia-based palm trader, adding that the

Fed's signal it was no rush to raise rates had sent the dollar

lower, providing support for commodities.

Market players said palm's gains were relatively subdued,

however, as the tropical oil struggles with poor global demand

and abundant supplies of competing oils.

"The market is up a bit today on the back of the rally of

U.S. soybean oil, and RBD palm oil," said a second trader with a

commodities brokerage in Kuala Lumpur. "The market is adjusting

and trying to hold for now."

The benchmark palm contract hit a near seven-week low of

2,128 ringgit on Wednesday as weak crude and soy prices raised

concerns that palm would lose more market share as a fuel and

for food.

Total traded volume stood at 55,578 lots of 25 tonnes, much

higher than the average 35,000 lots.

The world's top palm producer Indonesia said it was

considering lowering the threshold applied to its monthly export

tax for crude palm oil to between $500-$600 a tonne from $750.

"Downstream players are likely beneficiaries of this move as

they would be able to enjoy a wider processing margin due to the

export tax differential between processed palm products and

crude palm oil," said CIMB analyst Ivy Ng on Thursday.

In other markets, Brent crude oil fell back to $55 a barrel

on Thursday after Kuwait said OPEC had no choice but to keep

production steady, refocusing the market on global oversupply

Palm, soy and crude oil prices at 1034 GMT

Contract Month Last Change Low High Volume

MY PALM OIL APR5 2210 +15.00 2180 2212 417

MY PALM OIL MAY5 2212 +11.00 2173 2230 7847

MY PALM OIL JUN5 2206 +12.00 2165 2222 28870

CHINA PALM OLEIN SEP5 4738 +138.00 4652 4774 803982

CHINA SOYOIL SEP5 5444 +86.00 5384 5482 731406

CBOT SOY OIL MAY5 30.79 -2.10 30.67 31.03 10514

INDIA PALM OIL MAR5 439.80 -2.10 439.40 443.40 338

INDIA SOYOIL APR5 579.50 +0.45 577.60 582.60 22210

NYMEX CRUDE APR5 43.19 -1.47 42.91 44.71 7777

Palm oil prices in Malaysian ringgit per tonne

CBOT soy oil in U.S. cents per pound

Dalian soy oil and RBD palm olein in Chinese yuan per tonne

India soy oil in Indian rupee per 10 kg

Crude in U.S. dollars per barrel

($1 = 3.7025 Malaysian ringgit)

($1 = 6.1961 Chinese yuan)

($1 = 62.60 Indian rupee)