Indian shares rise 2.8 pct, Reliance Comm rebounds

By Narayanan Somasundaram

MUMBAI (Reuters) - Indian shares climbed 2.8 percent on Friday as investors picked bargains in the battered market, after political worries appeared to be easing but the outlook was grim due to inflation and high oil prices.

For the week, the market dropped 2.5 percent, stretching losses to seven weeks in a row, the longest run of declines in seven years.

No. 2 mobile operator Reliance Communications Ltd rebounded 12.5 percent to 438.20 rupees, its biggest one-day gain in just over two years on expectations some clarity may emerge on the status of its exclusive talks with MTN that end next week.

The stock had earlier lost about a third of its value since it announced the MTN talks on May 26.

The 30-share BSE index rose 2.75 percent, or 359.89 points, to 13,454, with 26 components gaining.

In the broader market, 1,688 gainers led 901 losers on volumes of 334 million shares.

With global oil prices hovering near $144 a barrel and annual inflation at more than 13-year high of 11.6 percent in late June, investors are bracing for more monetary tightening by the central bank, traders said.

"Except for valuations, all the other news flow is negative.