Indian rupee close to 1-yr low; oil, stocks weigh

(Updates to early trade)

MUMBAI, May 8 (Reuters) - The Indian rupee hovered near a one-year low on Thursday, as record oil prices drove up dollar demand from refiners and other importers, and fund inflows into a tepid stock market slowed.

At 11:00 a.m. (0530 GMT), the partially convertible rupee was trading at 41.67/68 per dollar, off an intraday low of 41.71, the weakest since Aug. 20, according to Reuters data.

If the rupee crosses 41.7150, it will be the lowest since April 2007. The currency's fall has raised concerns of a widening trade deficit.

The rupee ended at 41.36/37 on Wednesday.

"There is anticipation of more dollar demand from oil companies. That has pushed other importers to buy dollars," a senior trader with a foreign bank said.

Oil CLc1, India's biggest import, traded above $123 a barrel, close to its record high hit on Wednesday. India imports 70 percent of its oil needs, and crude refiners are among the biggest Indian buyers of dollars.

Traders said weakness in regional stock markets had increased worries of a slowdown in capital inflows. India's main share index traded lower, in line with a weak trend in Tokyo, Hong Kong and Singapore.

Foreign capital is a key driver of the rupee. Foreigners are net sellers of equities worth $2.9 billion in 2008, after buying more than $17.4 billion in the previous year. (Reporting by Anurag Joshi, Editing by Mark Williams)