Indian rupee backs off its lowest since Dec '02

* Rupee falls to lowest level since December 2002

* Banks sell dollars in spot market, buy in forwards

* Central bank likely to have intervened sporadically (Updates to close)

By Swati Bhat

MUMBAI, Oct 7 (Reuters) - India's rupee clawed back some of its losses on Tuesday after dropping to its lowest since December 2002, but weaker Asian currencies and a fall in the local stock market kept pressure on the unit.

The partially convertible rupee INR=IN ended at 47.915/93 per dollar, 0.2 percent weaker than 47.80/81 at close on Monday. The rupee fell to as low as 48.17 during the session, its lowest since Dec. 16, 2002, according to Reuters data.

"The rupee is under pressure because of the global scenario, dollar shortage, (and) weak equity outlook among other things," said V. Kumar, chief forex dealer at State Bank of Travancore.

"But the rupee recovered from the lows as some banks were selling dollars in the spot market and buying it in the forwards," he added.

Overnight foward rates, which were quoting at a premium earlier in the session, were at a discount of 0.03 rupees to spot at the close of the trading session, after sentiment was undermined by the dollar's strength overseas.

The euro held on to tepid gains against the dollar on Tuesday while sterling hit a 2-½ year low against the U.S. currency on renewed fears about the UK banking system. See [USD/].

Indian shares .BSESN staged a late rally to trim losses to 0.9 percent on Tuesday helped by domestic institutional buying in battered blue chips but sentiment was weak after funding worries emerged in British banks. See [.BO].

Foreign funds have so far sold a net $9.9 billion worth of Indian stocks after buying a record $17.4 billion last year.

Dealers said the central bank was likely to have sold dollars sporadically at different levels to prevent the rupee from a sharper fall, but the quantum of intervention was not very large.

The rupee is likely to remain under pressure in the near term and could test 49 to the dollar in about a month, with the central bank not expected to aggressively defend the unit at any particular level, dealers said.

Volumes in the currency futures market on the National Stock Exchange of India crossed a record 100,000 contracts on Tuesday with the near-term contract closing at 48.0050 to the dollar. (Editing by Mark Williams)