Indian shares rise 3 pct; Reliance, TCS rally

* Positive earnings boost global investor appetite

* Reliance Ind gains 5 pct as hearing begins on gas dispute

* Tata Consultancy surges 15.3 pct after Q1 profit rise
(Adds closing prices, details on Reliance firms, analyst
comments, European markets performance)

By Pratish Narayanan

MUMBAI, July 20 (Reuters) - Indian shares rose 3 percent on
Monday to their highest close in 5 weeks as a last-minute
rescue seen for troubled U.S. lender CIT Group (CIT.N) and a
raft of positive earnings fuelled global appetite for riskier
bets.

Reliance Industries (RELI.BO), controlled by billionaire
Mukesh Ambani, led the gains after India's highest court asked
the energy giant and former group firm Reliance Natural
Resources (RENR.BO) why a gas pact between the two should not
be cancelled. [ID:nHKG436514]

The government made a petition over the weekend to
intervene in the case, arguing the gas was its property and the
private pact between Mukesh and estranged younger brother Anil
over the gas was not valid.

"If the government succeeds in making the gas-supply
agreement null and void, Reliance Industries will be free to
sell the gas at market prices," Hitesh Agrawal, head of
research at Angel Broking said.

"The market has sensed that the advantage is with Reliance
Industries."

Reliance Industries, India's largest-listed firm with the
most weight in the main index, rose 5 percent to 2,030.65
rupees. The company had challenged a lower court ruling to
supply gas to Reliance Natural at a below-market price.

Reliance Natural, controlled by Anil Ambani, dropped 2.7
percent to 80.75 rupees. Group firms Reliance Infrastructure
(RLIN.BO) fell 1.2 percent to 1,135.85 rupees and No. 2
telecoms firm Reliance Communications (RLCM.BO) eased 1.1
percent to 270 rupees.

Tata Consultancy Services Ltd (TCS.BO), the country's top
IT-services firm by sales, surged 15.3 percent to 500.10
rupees, its best one-day percentage gain, after it beat
forecasts with a 22 percent rise in quarterly profit.
[ID:nBOM352657]

The news also sparked interest in other outsourcers, with
No. 2 player Infosys Technologies (INFY.BO) gaining 5.7 percent
to 1,972.70 rupees and smaller rival Wipro (WIPR.BO) climbing
7.1 percent to 460.05 rupees. All three stocks closed at their
best levels in more than a year.

The 30-share BSE index .BSESN ended up 3.03 percent, or
446.09 points, at 15,191.01 points, its highest close since
June 12. Twenty-four of its constituents rose.

The benchmark had climbed 9.2 percent last week, the best
among major markets in Asia -- as the government raised hopes
for financial reforms and monsoon rains, crucial to India's
domestic-demand powered economy, picked up after a weak start.

Several factors, including ample global and local
liquidity, a recovery in earnings growth and strong corporate
balance sheets, will spur the market over the next 12 months,
Morgan Stanley analyst Ridham Desai said.

"Indian equities are in a sweet spot. We would continue to
buy the dips in the market," he said.

A spike in risk-appetite worldwide also underpinned the
market, with record low global interest rates and trillions of
dollars in stimulus spending appearing to help the world
recover from the worst recession in 80 years.

A source close to the situation told Reuters U.S. lender
CIT Group Inc's board signed off on a deal late Sunday for $3
billion in rescue financing from a group of bondholders, in a
plan the lender hopes will stave off bankruptcy, further
boosting sentiment. [ID:nN19323064]

The BSE index, which had tumbled 9.4 percent in the first
week of July after the government's budget disappointed
investors looking for bold financial reforms, has bounced back
and is up 57 percent this year after slumping by more than half
in 2008.

The benchmark has leapt 89 percent from a 2009 low in early
March, riding a stocks rally that has swept across the globe.

In the broader market, gainers led losers by more than 2 to
1 on relatively moderate volume of 445.6 million shares.

The 50-share NSE index .NSEI rose 2.9 percent to
4,502.25.

Asian shares rose to their highest since around the time of
the collapse of Lehman Bros in September, with MSCI's measure
of Asian markets excluding Japan .MSCIAPJ rising 3 percent.
Japan's Nikkei .N225 was closed for a public holiday.

At 1041 GMT, the pan-European FTSEurofirst 300 .FTEU3
index of top shares was up 1.7 percent.

MAIN TOP 3 BY VOLUME

* Satyam Computer (SATY.BO) on 34 million shares

* Reliance Natural Resources on 23.9 million shares

* IFCI (IFCI.BO) on 18.5 million shares

STOCKS THAT MOVED

* Allahabad Bank (ALBK.BO) gained 9.3 percent to 86.80
rupees after the state-run lender beat forecasts by posting a
more than threefold rise in April-June net profit.
[ID:nBOM137009]

* Chemical maker BASF India Ltd (BASF.BO) climbed 9.7
percent to 271.35 rupees after it posted a 12 percent rise in
net profit for the June quarter.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee at 2-wk high as dlr tumbles vs majors
[INR/]
* Indian bond yields up ahead of heavy supplies this wk
[IN/]
* Dollar struggles, hits 6-week low vs euro
[FRX/]
* Oil rises to above $64, equities firm [O/R]
* World stocks rally on earnings, CIT news [MKTS/GLOB]
* Futures point to firmer Wall St open after CIT deal
[.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)