Indian shares fall 2 pct as oil, inflation burn

By Devidutta Tripathy

NEW DELHI (Reuters) - Indian shares fell 2 percent on Friday, extending losses to a fifth day and posting their first weekly drop in five weeks, as record high oil prices and rising inflation unnerved investors.

But leading mobile firm Bharti Airtel, which is likely to bid for South Africa's MTN, rose for a second day after falling nearly 9 percent in two sessions on concerns over financing a deal that could top $20 billion.

Traders said worries the government would arm-twist companies to cut prices to tame inflation undermined sentiment in the broader market, where losing stocks outnumbered gainers by almost three to one.

Finance Minister Palaniappan Chidambaram said the government would take more measures if needed to calm prices after annual inflation in late April came in at 7.61 percent, its highest since early November 2004.

"We are in the process of persuading the cement companies to roll back prices. If that succeeds, that will also be an administrative step," he said.

The 30-share BSE index fell 2.01 percent, or 343.58 points, to 16,737.07, with 27 components losing ground. It dropped 4.9 percent on the week, its first weekly loss since the week ended April 6.

In the broader market, volume was higher at more than 402 million shares.

"People fear that there will be government intervention on prices as they have done with steel and cement, which would hurt companies," said Rajesh Agarwal of CD Equisearch.