Indian rupee up on lower oil, shares curb gains

(Updates to close)

By Swati Bhat

MUMBAI, July 16 (Reuters) - The Indian rupee strengthened on Wednesday as global oil prices backed further away from record levels, marginally easing concerns over a widening trade deficit, but losses in local shares limited gains.

The partially convertible rupee <INR=IN> ended at 43.07/08 per dollar, 0.4 percent stronger than 43.23/24 at Tuesday's close. It hit a 15-month low of 43.50 earlier this month.

"Oil prices came below $137 per barrel in the latter half of the day, so the rupee also edged up," a dealer with a private bank said.

"However due to the uncertainty on the political front we are seeing outflows from the stock market, which is putting pressure on the rupee," he added.

Oil <CLc1), India's biggest import, dropped further on Wednesday after a sharp fall in the previous session on expectations that a faltering economy in top energy consumer the United States would hit demand growth. See [O/R]

Oil was trading just above $137 a barrel.

India's government will have to prove its majority in a parliamentary vote next week after its communist allies withdrew support over a nuclear energy deal with the United States.