Indian rupee gains as firm sells dlrs, data hurts

The Indian rupee hit a two-week high on Friday as a corporate sold a sizeable amount of dollars, but then trimmed its gains as unexpectedly weak industrial output data sparked a stock market sell-off and oil hit a record high.

The partially convertible rupee ended at 42.87/88 per dollar, off an intraday high of 42.68, its strongest since June 26, but still 0.3 percent higher than Thursday's close of 42.99/43.00. It had hit a 15-month low of 43.50 last week.

"There was heavy dollar selling from a large corporate, which offset the pressures from weaker stocks and lower-than-expected industrial output data, but the dollar-rupee did recover from

42.68 levels," a dealer with a private bank said.

"Oil has also hit a fresh record, if it continues to stay at these levels, it will affect the market sentiment," he added.

Four traders said the dollar seller was a large pharmaceutical company.

Industrial output rose 3.8 percent in May from a year earlier, the weakest rate in six years, while annual inflation was a higher-than-expected 11.89 percent on June 28, data showed on Friday.

Adding to inflation concerns, oil jumped over $4 a barrel to a record high near $146 a barrel on Friday, spurred by growing worries of threats to supplies from Iran and Nigeria and a strike on Brazilian oil workers next week.

Oil is India's biggest import and the record prices have widened the trade deficit, helping push the rupee down this year.

The weak industrial output numbers undermined sentiment in the stock market, which ended down 3.3 percent. Falls in stocks normally raise concerns of selling by foreign investors, which then weighs on the rupee.

Dealers said the rupee should trade a 42.60-43.30 range next week, depending on how factors such as local politics, stocks and oil prices play out.