Indian rupee falls to weakest since July 2006

MUMBAI, Sept 16 (Reuters) - The Indian rupee fell to its lowest since July 2006 on Tuesday, hit by concerns about capital outflows from the local share market, offsetting dollar sales by state banks to halt the rupee's fall.

* At 2:10 p.m. (0840 GMT), the partially convertible rupee INR=IN was at 46.95/97 per dollar, its weakest since July 24, 2006. It had ended at 46.05/06 on Monday. The rupee has not traded at 47 per dollar since July 2006.

* India's main share index .BSESN was down more than 2 percent, tracking shaky global stocks, hurting sentiment for the rupee.

* Dealers said suspected intervention by the central bank at different levels to shore up the rupee slowed the pace of depreciation during the session.

* Dealers said dollar demand from banks looking to arbitrage between the local and offshore markets also hurt the rupee.

* One-month offshore non-deliverable forward contracts PNDF were quoting at 47.20/30, weaker than the onshore spot rate. (Reporting by Swati Bhat; editing by Sunil Nair)