UPDATE 1-Vietnam's banks cut loan rates, stocks rise

(Adds stock market, paragraphs 2, 10-12)

HANOI, Nov 4 (Reuters) - State-run bank BIDV, Vietnam's second-largest lender, said on Tuesday it was trimming loan rates by up to 1.2 percentage points after the central bank announced its second rate cut in two weeks to support economic growth.

Share prices extended recent gains in response to the move.

The central bank said on Monday it was cutting three main interest rates and lowering the compulsory reserves required on bank deposits. The new rates, including a base rate of 12 percent, are effective Wednesday. [ID:nHAN397547]

Hanoi-based Bank for Investment and Development of Vietnam (BIDV) said it dropped rates on short-term loans by between 1.0 and 1.2 percentage points, now charging 16 percent.

However, businesses dealing with oil products, steel, cement, fertiliser and medicine would be able to borrow at a rate of 15 percent, BIDV said in a statement.

State-run Agribank, Vietnam's largest lender, and other banks would cut their dong lending rates by up to 1.5 percentage points, the State Bank of Vietnam said on Tuesday.

Agribank's dong loan rates would ease to between 15 percent and 16 percent from 16.5 percent and Vietcombank, the country's largest partly private lender, would cut lending rates by 2.5 percentage points to 16 percent.

Lower lending rates could help boost lending, which was curbed by the central bank earlier this year when it was tightening policy to contain double-digit inflation.

Consumer prices in October fell 0.19 percent from September, the first monthly drop since March 2007. That still gave an annual inflation rate of 26.7 percent but the central bank has opted to loosen policy to support the economy, with the global credit crisis threatening a world recession.

The Ho Chi Minh Stock Exchange .VNI, Southeast Asia's worst performer this year, gained 3.67 percent on Tuesday to end at 361.44, extending its gains into a fifth straight day.

Analysts said the reduction in compulsory reserves would give banks more funds, while their lower lending rates would help corporate borrowers, especially those in the real estate and financial sectors.

Shares in Sacombank STB.HM jumped by the daily limit of 5 percent to close at 23,100 dong.

According to central bank data, bank loans in January to October rose 19.6 percent from the same period last year. In January-October last year they rose 37.73 percent. ($1=16,512 dong) (Reporting by Dang Trung Nghia and Pham Hong Hanh; Editing by Alan Raybould)