Asia Gold-India discounts widen to most in 2 months; demand up elsewhere

* Gold prices in India at discount for second straight week

* China premiums edge up to $8-$9 an ounce

* Spot gold set for worst week in about 5-months

MUMBAI/BENGALURU, May 18 (Reuters) - Gold discounts in India widened to the highest level in nearly two months this week due to sluggish demand amid high local rates, while buying in other major Asian centres ticked up as global prices slid to 2018 lows.

Dealers in India were offering a discount of up to $4 an ounce over official domestic prices this week, the most since March 24. Last week, the discounts were at $1 an ounce. The domestic price includes a 10 percent import tax.

“Jewellery showrooms are witnessing lower footfalls in the last few days. It is forcing them to slash purchases,” said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.

In the overseas market, gold prices have corrected but in the local market prices are still elevated due to a depreciating rupee, Jain said.

The rupee has fallen more than 6 percent so far in 2018, having plunged to its lowest in 16 months this week.

In the Indian market, gold futures were trading around 31,026 rupees per 10 grams, not too far from last month’s 31,620 rupee level, a peak since August 2016.

“Demand will remain subdued in coming weeks unless prices fall sharply in Indian rupee terms,” said a Mumbai-based dealer with a private bullion importing bank.

In top consumer China, demand for physical gold improved, with premiums of $8-$9 an ounce being charged over the benchmark price, versus $6-$8 last week.

Premiums of 60 cents to $1.30 an ounce were being charged in Hong Kong this week, little changed from the 50 cents-$1.50 range last week.

“Physical gold demand is slightly better than it was when prices were above $1,300,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Benchmark spot gold has declined about 2 percent so far this week, having touched a 4-1/2-month low of $1,285.41 per ounce on Thursday.

“Physical demand was much better this week than we have been seeing... we saw good demand especially on the wholesale side,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

“As prices breached the key psychological $1,300 level for the first time this year… many investors and even businesses are looking to buy anything below that level.”

In Singapore, premiums inched up to 90 cents an ounce, as against 80 cents last week.

“Demand picked a bit, but not as quick as it should have been... price in local currencies is still quiet high,” said a Singapore-based dealer.

In Japan, gold continued to be sold flat versus the global benchmark, but “demand picked up in the middle of this week when prices fell,” said a Tokyo-based trader.

Reporting by Rajendra Jadhav in Mumbai and Swati Verma in Bengaluru Editing by Keith Weir