Indian shares drop 0.6 pct, Bharti slides

By Hiral Vora

MUMBAI (Reuters) - Indian shares surrendered an early rise and fell 0.6 percent on Tuesday, with top mobile services operator Bharti Airtel Ltd sliding 2 percent after a potential rival emerged for South Africa's MTN Group.

Traders said investors were cautious because of the cloudy outlook for companies as six-year high interest rates squeeze consumer spending.

"There is too much uncertainty around -- inflation is showing no signs of cooling off, domestic growth is slowing down and economists are shooting in the dark on where the Indian economy is heading," said Deepak Singh, an independent analyst in Bangalore.

The 30-share BSE index ended 0.64 percent, or 108.04 points, lower at 16,752.86, with 18 components in the red, after rising 1.3 percent during trade. In the broader market, gainers beat losers 1,405 to 1,305 on volume of nearly 414 million shares.

The index, which gained 10.5 percent in April, is down 17.4 percent in 2008.

Data on Monday showed industrial output grew 3 percent in March from a year earlier, the slowest pace in six years, as a tighter monetary policy crimped demand.

Bharti Airtel fell 2.03 percent to 821.25 rupees, its lowest close since May 7, after UAE's Emirates Telecommunications Corp said on Monday it was evaluating a bid for MTN.

Bharti's shares have lost 8.3 percent after the firm said last week it was in exploratory talks with the South African firm, and traders said it might now have to raise its indicative offer, which media reports said valued MTN at about $37 billion.