Indian rupee sheds gains as local shares fall

MUMBAI, July 24 (Reuters) - The Indian rupee shed early gains in midday trade on Thursday, as losses in the local share market raised worries of rising capital outflows, but lower oil prices limited sharp losses.

* At 12:50 p.m., the partially convertible rupee <INR=IN> was at 42.04/05 per dollar, off an early high of 41.82 and marginally stronger than 42.09/10 at close on Wednesday.

* India's main share index was down about a percent, led lower by export-oriented software stocks after the rupee rose to a two-month high against the dollar. See [.BO].

* Oil CLc1 steadied around $124.5 per barrel on Thursday, after extending a steep drop from this month's record high due to U.S. data that signalled economic woes and high prices were slowing demand in the world's top consumer. See [O/R]. (Reporting by Swati Bhat; Editing by Harish Nambiar)