Ravaged Vietnam stock mkt logs first rise in 6 weeks

HANOI, June 12 (Reuters) - Vietnam's stock market .VNI, the world's worst performer so far this year, made its first gain on Thursday after falling for six weeks in a row, as investors sought bargains but inflation and the trade deficit remained concerns.

The Ho Chi Minh Stock Exchange edged up 0.03 percent to close at 370.55 points in the first positive trading session since April 29. The index has lost 29 percent in the past six weeks.

The 8-year-old market is down 60 percent this year after jumping 23 percent in 2007 on bright prospects for the emerging Southeast Asian economy.

But higher prices of food and fuel and high credit growth have led to seven consecutive months of double-digit inflation, more than 25 percent in May.

"It will take some time for the index to rebound sustainably," said Tong Minh Tuan, an economist at the Research & Advisory Department of IPA Investments. "The main reason is concern over bank liquidity. The market comeback may depend very much on the stability of the banking industry."

Ratings agencies have downgraded outlooks on the Vietnamese economy, also citing the fragility of the young banking system faced with a liquidity crunch.

On Wednesday, the central bank raised the base interest rate for the dong, which is used by commercial banks to calculate dong loans and deposit rates to 14 percent from 12 percent.

It was the third interest rate hike this year and the State Bank of Vietnam, the central bank, also lowered the dong by 2 percent against the dollar, a move that analysts described as an effective devaluation [ID: nSP288969].

Soaring imports have tripled the trade deficit to $14.4 billion so far this year, adding to the economic woes.

Domestic investor confidence in the stock market has been shattered. Shares were down on every trading day in May and up to June 11 within a narrow trading band of +/- 2 percent.

Most of the gainers on Thursday session were smaller companies while blue chip shares fell.

Shares in the Ho Chi Minh Stock Exchange's only listed bank, Sacombank STB.HM, extended a two-month slide to close at 20,900 dong on Thursday, down 1.9 percent and losing about 50 percent over the past two months.

The over-the-counter Hanoi stock market .HASTCI gained 0.9 percent to close at 109.5 points, just a third of what it was at the end of last year. (Reporting by Nguyen Nhat Lam and Pham Hong Hanh; Editing by Grant McCool and Anshuman Daga)