Indian shares jump nearly 4 pct, post biggest single-day gain since May 2009

* BSE index gains 3.77 pct; NSE ends 3.81 pct higher

* L&T shares rally; Goldman adds to 'conviction buy'

* Foreign-owned companies surge on cbank decision

By Abhishek Vishnoi

MUMBAI, Sept 10 (Reuters) - Indian shares jumped nearly 4

percent on Tuesday, their biggest single-day gain since May

2009, led by blue chips, as receding fears of a U.S.-led

military strike on Syria and a sturdier rupee sparked hopes

about foreign investor flows.

Shares posted their fourth consecutive session of gains to

send the indexes to their highest since late July, after foreign

institutional investors (FIIs) bought nearly 20 billion rupees

($306.26 million) worth of Indian cash shares in the previous

three sessions.

The foreign buying, and subsequent gains in shares as well

as the rupee, comes after Raghuram Rajan took over as the new

governor of the Reserve Bank of India on Sept. 4 and announced a

slew of measures to support the currency and open up markets.

Hopes that Rajan will unveil more market-friendly measures

were further boosted after the RBI, late on Friday, made it

easier for foreign promoters of domestic listed companies to

increase their stakes via share purchases.

Traders are also hoping the government will announce steps

over the next few days to curb non-essential imports, with

expectations also growing for a hike in subsidised diesel

prices, which would ease concerns about the government's

finances.

"The RBI steps aiding FII flows and Syria threat receding

are driving shares higher. It seems people are getting confident

of at least the RBI's plans, if not government's," said Deven

Choksey, managing director, K R Choksey Securities.

The broader NSE index rose 3.81 percent, or 216.35

points, to end at 5,896.75, posting its highest close since July

25.

The benchmark BSE index gained 3.77 percent, or

727.04 points, to end at 19,997.10, to its highest close since

July 24.

The gains also tracked higher global shares on receding

expectations of U.S.-led military action against Syria and

better-than-expected industrial output and retail sales data

from China.

In India, data showed the trade deficit in August narrowed

to $10.9 billion, with exports surging 13 percent and imports

remaining flat. Although that was wider than some expectations,

the narrowing deficit was still seen boding well for the

troubled rupee.

Among blue chip shares, Housing Development Finance Corp Ltd

rose 6.4 percent, while ITC Ltd gained 6.2

percent.

Shares of Larsen & Toubro Ltd (BSE: LNT.BO - news) gained 7 percent

after Goldman Sachs (NYSE: GS-PB - news) added the stock to its "conviction buy

list," citing valuations and growth potential among other

factors.

Tata Motors Ltd rose 10 percent to its all-time

high of 349.70 rupees after its unit Jaguar Land Rover Ltd

unveiled a $2.4 billion investment in a new range of

lightweight aluminium sports and cross-over cars aimed at the

mass market.

Shares in companies owned by foreign promoters also rallied

after the central bank said on Friday it would allow

non-residents to buy stocks of listed domestic firms through the

foreign direct investment route.

The new rule would make it easier for foreign promoters, who

were earlier able to raise their stakes only through separate

processes such as open market offers, to buy shares in listed

companies.

ABB India Ltd jumped 17.43 percent, while Siemens

Ltd gained 7.8 percent and United Spirits Ltd

rose 3.9 percent.

However, among stocks that fell, Cairn India Ltd

dropped 1.2 percent as the oil benchmark dropped to a one-week

low below $113 a barrel earlier on Tuesday after Russia offered

to help put Syria's chemical weapons under international

control, calming worries of a potential U.S.-led strike against

the country.

For additional stocks on the move double click

FACTORS TO WATCH

* Yen under pressure as Syria concerns wane

* China data boosts stocks as Syria diplomacy cools oil

* Markets on hold, counting down to U.S. jobs data

* Foreign institutional investor flows

* For closing rates of Indian ADRs

ASIA-PACIFIC STOCK MARKETS:

Pan-Asia........ Japan....... S.Korea...

S.E. Asia.......

Hong Kong... Taiwan....

Australia/NZ....

India....... China.....

OTHER MARKETS:

Wall Street ....

Gold ....... Currency..

Eurostocks.....

Oil ........ JP bonds...

ADR Report .....

LME metals. US bonds..

Stocks News US.. Stocks News Europe

DIARIES & DATA:

Indian Data Watch Asia earnings diary

U.S. earnings diary European diary

Indian diary Wall Street Week Ahead

Eurostocks Week Ahead

TOP NEWS:

For top Asian company news, double click on:

U.S. company news European company news

Forex news Global Economy news

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(Editing by Jijo Jacob)