Indian shares fall 1.3 pct; Reliance, L&T drop

* Worries about global economy, earnings season weigh

* Budget disappointment, weak monsoon keep investors wary

* Shares to track international markets in near term

* ICICI Bank, HDFC Bank among major losers
(Updates to mid-morning)

MUMBAI, July 13 (Reuters) - Indian shares fell 1.3 percent
on Monday, tailing lower Asian peers as uncertainty about a
recovery in the global economy and anxiety about corporate
earnings weighed on investor confidence.

Energy giant Reliance Industries (RELI.BO), engineering and
construction conglomerate Larsen & Toubro (LART.BO), and
private-sector lenders ICICI Bank (ICBK.BO) and HDFC Bank
(HDBK.BO) led the losses.

By 11:10 a.m. (0540 GMT), the 30-share BSE index .BSESN
was down 1.3 percent at 13,336.05 points, with 25 stocks
declining, after falling as much as 1.8 percent.

"Investors are going to wait and see how the monsoon and
earnings season progresses," Pisupati Subramanyam, president at
Ventura Securities, said.

A poor start to monsoon rains, crucial for India's domestic
demand-led economy, and an annual budget that disappointed
investors who were expecting bold economic and financial
reforms dragged down the market 9.4 percent last week, its
biggest fall in eight months.

The benchmark had rallied 22.5 percent between mid-May and
July 3 after the ruling coalition won re-election and raised
expectations for reforms such as easing of foreign investment
limits in the insurance sector and proposals for stake sales in
state-run firms.

But the budget last Monday focused on social spending
programmes, had little to offer for reforms and set a huge
deficit of 6.8 percent of gross domestic product, the highest
in 16 years.

"The expectations were not met, and money is not coming
into the market," Subramanyam said.

However, analysts do not see a significant fall in shares
as longer-term prospects for the market remained bright.

The benchmark is still up more than 60 percent from a 2009
low in early March, and has risen over 35 this year after
losing more than half its value in 2008.

Traders said shares would track world markets in the near
term, with investors watching quarterly results from companies
for clearer signs of an economic recovery.

"We are going to react to overseas markets for a while, and
the amount of foreign fund inflows and liquidity coming into
the market will determine how it performs," Subramanyam said.

"For now, there is no fresh trigger to attract investors to
the market."

Reliance Industries, India's largest-listed firm with the
most weight in the main index, fell 2.6 percent to 1,731.80
rupees, while Larsen & Toubro dropped 2.9 percent to 1,320
rupees.

ICICI Bank slid 1.2 percent to 621.50 rupees, while rival
HDFC Bank eased 1.3 percent to 1,368.35 rupees.

In the broader market, losers led gainers by more than 4.5
to 1 on relatively light volume of 86.3 million shares.

The 50-share NSE index was down 1.2 percent at
3,955.80.

Asian shares were lower, with Japan's Nikkei .N225 down
2.1 percent, while MSCI's measure of other Asian markets
.MSCIAPJ fell 2.2 percent.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 5.2 million shares

* Suzlon Energy (SUZL.BO) on 4.2 million shares

* Satyam Computer (SATY.BO) on 3.5 million shares

STOCKS ON THE MOVE

* IL&FS Investment Managers Ltd (ILFS.BO) rose 7.9 percent
to 135 rupees after the company said late on Friday its board
would meet on Wednesday to consider a stock split.

* Gammon India Ltd (GAMM.BO) fell 10.1 percent to 145
rupees after a rail bridge it was building for the Delhi Metro
Corp collapsed in New Delhi early on Sunday.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee at 2-month low; stocks awaited
[INR/]
* Indian bond yields down on US cues
[IN/]
* Yen takes possible election date in stride
[FRX/]
* Oil falls below $60, economic, demand worries linger [O/R]
* Nikkei down for ninth day, oil steadies [MKTS/GLOB]
* Dow, S&P 500 in fourth weekly fall as economy weighs
[.N] * For closing rates of Indian ADRs

INADR (Reporting by Pratish Narayanan; Editing by
Ranjit Gangadharan)