UPDATE 1- NYSE short interest rises in first-half Oct

NEW YORK, 27 Oct (Reuters) - Short interest in the New York Stock Exchange rose in the first half of October, the NYSE said on Tuesday, suggesting an increase in bearish sentiment among equities investors.

After a run in the S&P 500 that saw the index rise more than 56 percent from its March lows to the end of September, some investors are expecting the market to give back some of those gains.

"People are betting the equity market run may be tested. They are looking for a correction of some sort," said Bill Rhodes of Rhodes Analytics in Boston.

"We're getting close to full valuation in the U.S. market based on some very long-term indicators. That doesn't mean the market can't go beyond that, but I'm looking at it and I know other people are looking at it as well."

As of Oct. 15, short interest on the NYSE rose 2.9 percent to about 13.4 billion from 13.1 billion shares held short at the end of September, and amounted to 3.5 percent of total shares outstanding, the NYSE said.

Nasdaq said on Monday short interest in that exchange edged up 0.5 percent to 6.37 billion shares.

Investors who sell securities "short" seek to profit from falling stock prices. They sell borrowed shares, with the hope of buying them back at a lower price to return the shares and pocket the difference. (Reporting by Rodrigo Campos, Editing by Chizu Nomiyama)