BSE Sensex logs first weekly gain in 3 weeks

By Ami Shah

MUMBAI (Reuters) - The BSE Sensex climbed 0.6 percent on Friday and helped post its first weekly rise in three, with banks leading the rebound as investors picked bargains after last month's fall.

Gains in global stocks after the U.S. Labor Department said initial claims for state unemployment benefit had dropped to its lowest level since early January also underpinned the market.

Tata Steel, the world's No. 8 steelmaker, firmed 3.1 percent to 499.70 rupees, after steel sales at its Indian operations rose an annual 38 percent in October.

Banks were bolstered after Standard & Poor's said on Thursday they would gain more than they would lose from tighter loan provisioning requirements.

Top lender State Bank of India rose 3.1 percent, its biggest rise in three weeks, to 2,204.20 rupees and while rival ICICI Bank added 0.5 percent to 848.75 rupees.

India's central bank had said on Oct. 27 banks must increase the minimum provision ratio for bad debts to 70 percent by September 2010.

State Bank and ICICI are still down 4.4 percent and 4.7 percent since Oct. 26.

S&P said the changes would boost banks' provisioning cushions and bring coverage ratios in line with their major Asian peers.