Indian shares halt 3-day fall, rise 0.55 pct

* State Bank of India leads rise on Goldman upgrade

* Reliance falls for 2nd day after gas supply ruling

* L&T, Reliance Infrastructure among major gainers

* Trading to remain choppy till budget on July 6
(Updates to close)

By Pratish Narayanan

MUMBAI, June 16 (Reuters) - Indian shares climbed 0.55
percent on Tuesday, led by State Bank of India (SBI.BO), as
some long-term investors saw value in the market after it shed
almost 4 percent over three days.

But trading was choppy as tepid U.S. regional manufacturing
data soured sentiment across markets in Asia.

Reliance Industries (RELI.BO) fell for a second day after a
court asked the billionaire Mukesh Ambani-controlled energy
group to sell gas at half the government-approved price to his
estranged brother's firm. [ID:nBOM433343]

Engineering conglomerate Larsen & Toubro (LART.BO) and
Reliance Infrastructure (RLIN.BO) were among the major gainers
as investors bet their order book would be boosted by
government plans to repair the country's ramshackle
infrastructure.

"Focus on infrastructure in India is legendary, and tales
of woe abound. Improvements are taking place, as any foreign
business visitor will be aware, but the need for more is
paramount," Goldman Sachs economists Jim O'Neill and Tushar
Poddar said in a report.

"Incremental demand for infrastructure will continue to
increase due to economic growth and urbanisation."

The 30-share BSE index .BSESN ended up 82.39 points at
14,957.91, with 23 stocks gaining, after falling as much as 1.7
percent at one stage.

Government-run State Bank of India rose 4.4 percent to
1,714.10 rupees after Goldman Sachs upgraded the stock to "buy"
from "neutral," citing a strong earnings outlook and
inexpensive valuations.

A tax official told Reuters the country's top lender had
paid 10.68 billion rupees in advance taxes in April-June, 61
percent more than a year earlier, indicating better earnings.

Almost $8 billion in investments from foreign funds, as
optimism grew the economy was picking up, have lifted the
benchmark 86 percent from a 2009 low in early March.

It also received a boost after the ruling Congress-led
coalition was re-elected last month, raising hopes a stronger
election mandate may encourage the government to accelerate
investor-friendly economic and financial reforms.

But concerns have emerged about expensive valuations, with
niggling worries about the global economy and an uncertain
outlook for corporate earnings growth weighing on investor
confidence.

Investors will be wary ahead of the annual budget in early
July, when the government is expected to announce reform plans
to boost sagging economic growth and tackle a yawning fiscal
deficit, analysts said.

"The market has held up very well recently, and so we could
see some consolidation over the next few sessions. But there
could be a recovery ahead of the budget in anticipation of the
reforms the government could come out with," Hitesh Agrawal,
head of research at Angel Stock Broking, said.

"The bulls are not likely to give up very easily."

Larsen gained 1.3 percent to 1,526.55 rupees, while
Reliance Infrastructure advanced 6.1 percent to 1,268.55
rupees.

Reliance Industries fell 1.8 percent to 2,141.60 rupees,
after dropping 7.5 percent in the previous session.

Non-ferrous metals producer Sterlite Industries dropped 4.4
percent to 634.10 rupees as copper prices in Shanghai SCFc3
fell for a fourth day. [ID:nSP467637]

ICICI Bank (ICBK.BO) fell as much as 2.6 percent after
Goldman Sachs downgraded the stock, saying current valuations
factor in potential upside from its operating fundamentals.

The private-sector lender, which was downgraded to
"neutral" from "buy," later pared losses to end flat at 733.35
rupees, after almost tripling in value from early March.

In the broader section, gainers led losers 1,654 to 1,017
on relatively heavy volume of 696.2 million shares.

The 50-share NSE index rose 0.75 percent to
4,517.80.

Most other Asian markets were lower on Tuesday, with
Japan's Nikkei .N225 falling 2.9 percent, while MSCI's
measure of other Asian markets .MSCIAPJ lost 1.2 percent.

U.S. equities marked their worst slide in a month on Monday
after the New York Fed's Empire State general business
conditions index showed the factory sector shrank at a much
more severe rate in June than the previous month.

MAIN TOP 3 BY VOLUME

* Reliance Natural Resources (RENR.BO) on 45.4 million
shares

* IFCI (IFCI.BO) on 22 million shares

* Unitech (UNTE.BO) on 21.4 million shares

STOCKS THAT MOVED

* Lakshmi Energy and Foods Ltd (LAKO.BO) rose 6.7 percent
to 91.15 rupees after the food processor said it got an export
order worth about 3 billion rupees for exporting a new variety
of basmati rice.

* Flawless Diamond (India) Ltd (FLDM.BO) advanced 1.9
percent to 38.45 rupees after the company said it won orders
worth 110 million rupees ($2.30 million).

* Drugmaker Dr Reddy's Laboratories (REDY.BO) gained as
much as 5.2 percent after it signed an alliance with
GlaxoSmithKline (GSK.L). The stock later pared gains to end up
0.3 at 712.50 rupees. [ID:nLF635888]

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee largely steady on choppy stx; weak dlr
[INR/]
* Indian bond yields off lows on supply concerns
[IN/]
* Dollar stung by Russia comments, euro up on ZEW
[FRX/]
* Oil rises above $71 as dollar weakens [O/R]
* Stocks off lows after ZEW data; dollar down [MKTS/GLOB]
* US stock index futures point flat to lower start

[.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)