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* Technical selling weighs on cattle before midday recovery * Cattle gains limited by weak beef, poor margins * Hogs bounce after steep drop, but lower pork weighs By Karl Plume CHICAGO, Feb 7 (Reuters) - Chicago Mercantile Exchange live cattle futures closed mixed on Thursday as early technical-selling pressure faded, but the market remained anchored by weak beef prices and poor packer margins, traders and analysts said. Hopes for higher cash cattle prices in the southern Plains this week supported the thinly traded spot contract, but bids and offers in the cash market remained wide apart. "We filled a chart gap yesterday in the April live cattle and technically they looked weak so we had some early technical selling. But when that didn't follow through the market came back," said Jim Clarkson, analyst at A&A Trading. "There isn't any really new fundamental news so we're just jostling here. We've got big open interest in the April live cattle and we're still waiting for cash to trade this week." Cash cattle bids at southern Plains feedlot markets were around $123 per cwt on Thursday afternoon against offers of $127 to $128, traders said. Cattle traded last week at $122 to $124. Although beef prices were expected to begin firming seasonally later this month, prices remained under pressure on Thursday. The U.S. Department of Agriculture quoted the wholesale choice boxed beef cutout at $183.46 per cwt, down 48 cents from Wednesday and $1.86 from a week ago. The select cutout, however, rose 48 cents to $181.13 per cwt, up 88 cents from a week ago. A severe snowstorm expected to hit the heavily populated northeastern United States could blunt demand for beef as restaurant traffic could slow, traders said. Estimated margins for U.S. beef companies fell to a negative $65.70 per head on Thursday, versus a negative $26.25 per head a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC. CME live cattle spot February settled 0.300 cent per lb higher at 127.550 cents and the most-active April ended up 0.075 cent at 131.525 cents. Back-month contracts were 0.275 to 0.525 cent lower. CME March feeder cattle settled at 147.200 cents per lb, down 0.350 cent. HOGS REBOUND Lean hog futures rebounded modestly from Wednesday's steep declines, but weak pork prices and poor packer margins continued to hang over the market, traders said. Investors were cautious ahead of Friday's monthly USDA grain supply and demand report, which will offer price direction to feed grain markets. "The market is coming out of a fairly steep correction and we haven't had any severe weather that could impact production," said Sterling Smith, futures specialist with Citigroup. "Every hog in America is basically a four-legged corn and soymeal processing plant so they're really watching that USDA grain report. Nobody wants to be too aggressive ahead of that." February hogs settled up 0.075 cent per lb at 86.975 cents. The spot contract remained at a wide discount to the latest CME lean hog index price of 89.92 cents ahead of its expiration next Thursday. Most-active April ended at 86.525 cents, up 0.275, and June closed 0.200 higher at 93.450 cents. Cash pork prices slid lower again on Thursday, with the carcass cutout value quoted by USDA at $81.69 per cwt. That was down 72 cents from the previous day and $3.35 from a week ago. The average pork packer margin for Thursday was a negative $16.35 per head, compared with a negative $13.75 on Wednesday and a negative $5.20 on Jan. 31, according to HedgersEdge.com.