Financials lead India stocks down 3 pct, autos up

* Global mkts, econ worries spark concerns about fund flows

* State Bank, ICICI, Housing Development drop

* Autos rise on higher sales, outlook
(Updates to late morning)

MUMBAI, July 8 (Reuters) - Indian shares fell more than 3
percent on Wednesday after a global markets slide on the back
of doubts about world economic recovery triggered concern about
foreign fund flows.

Financial stocks fancied by foreign portfolio investors led
the drop. Volume was moderate, but losing stocks outnumbered
gainers in the ratio of more than 4:1.

Auto stocks bucked the trend on rising car sales and hopes
the government's focus on the farm sector would boost demand
for tractors and utility vehicles, and increased allocation for
urban schemes will help sales of buses, traders said.

Tractor and utility vehicle maker Mahindra and Mahindra
(MAHM.BO), truck and bus leader Tata Motors (TAMO.BO) and No. 1
car producer Maruti Suzuki (MRTI.BO) rose 0.2-1.7 percent.

By 11:50 a.m. (0620 GMT), the main stock index .BSESN was
trading down 2.55 percent, 363.03 points, at 13,807.60 points,
with all but 4 of its components in the red. It fell as low as
13,701.76.

"The market could dip further as there are no positives in
sight to pull it up given the negative global cues," said Mehul
Dedhia, assistant vice-president at brokerage firm Sharekhan.

The stock index had fallen 5.8 percent on Monday after the
government budget disappointed investors, but pulled back
mildly on Tuesday.

Still, the benchmark is up 43 percent so far this year,
largely driven by net foreign fund inflows of $5.2 billion.

Jigar Shah, senior vice-president at Kim Eng Securities,
said foreign funds were not negative on India but there were
worries.

"Fresh concerns on the momentum of recovery in the global
markets is what is affecting their overall investment
globally," he said.

Traders said investors turned wary about financial stocks
after State Bank of India (SBI.BO) Chairman O.P. Bhatt said on
Tuesday interest rates could harden in six months as demand for
loans picks up. [ID:nBOM391565]

Shares in Housing Development and Finance Corp (HDFC.BO)
dropped 3.6 percent to 2,279 rupees, State Bank fell 3 percent
to 1,587 rupees and ICICI Bank (ICBK.BO) shed 6 percent to
653.10 rupees.

Asian markets were trading lower on Wednesday with Japan's
Nikkei share average and oil prices hitting six-week lows as
investors pulled funds out of bets on the global economy's
recovery and favoured safe havens, such as the U.S. dollar and
government bonds.

The broader 50-share NSE index was down 2.52
percent at 4,096.25.

MAIN TOP 3 BY VOLUME

* Unitech Ltd (UNTE.BO) on 12.4 million shares

* Suzlon Energy (SUZL.BO) on 7.5 million shares

* Ispat Industries (ISPT.BO) on 5 million shares

STOCKS ON THE MOVE

* Bharati Shipyard (BHAR.BO) fell 3.8 percent to 150.95
rupees, after the shipbuilder raised its open offer for a
controlling stake in Great Offshore Ltd (GOFS.BO), sparking
concerns the deal could be over-valued, a dealer said.

Bharati revised its bid for a 20 percent stake in Great
Offshore to 405 rupees a share from 344 rupees earlier, it said
late on Tuesday. [ID:nBOM416460]

* Cement manufacturers Grasim (GRAS.BO) and ACC (ACC.BO)
were up 1.1-3.3 percent as hopes of higher infrastructure
spending would boost demand.

FACTORS TO WATCH
* For technical analysis, double click on
www.reutersindia.net
* Indian rupee hits 2-week low as shares fall 3 pct
[INR/]
* Indian bond yields ease on buyback, U.S. cues
[IN/]
* FOREX-Yen hits 6-week highs as risk appetite ebbs
[FRX/]
* Oil falls 6th day toward $62 on U.S. inventory builds
[O/R]
* Nikkei and oil hit 6-wk lows on econ worries
[MKTS/GLOB]
* Wall St hits 10-week low amid talk of new stimulus
[.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Ami Shah; Editing by Ranjit Gangadharan)