Indian shares rise 1.4 pct; Reliance, HDFC gain

* Firm Asian, European markets bolster sentiment

* Political risk seen near term; elections results due May
16

* Metal producers climb on firmer metal prices
(Updates to close)

By Pratish Narayanan

MUMBAI, May 7 (Reuters) - Indian shares rose 1.4 percent on
Thursday, joining a rally across Asian and European markets on
receding concerns about the health of the financial sector and
the global economy.

Reliance Industries (RELI.BO), which last month began
pumping gas from its massive fields off India's east coast, and
leading mortgage firm Housing Development Finance Corp
(HDFC.BO) led the gains.

Analysts said a Wall Street rally on Wednesday set the mood
for the markets across the region after a private-sector
reading on the U.S. labour market signaled unemployment may be
receding and leaked bank stress test results suggested most
banks are healthier than previously thought.

However, the Indian market could be vulnerable to
turbulence after rebounding more than half from its 2009 low in
early March, if general election results due on May 16 through
up a fractured mandate, they said.

"We are merely following international markets today. The
market is overlooking the changes on the electoral front over
the past few days," V.K. Sharma, head of research at Anagram
Stock Broking, said.

"People should keep one foot near the door, ready to leave
the party when there is a fall in the market," he said.

The 30-share BSE index .BSESN rose 1.37 percent, or
164.19 points, to 12,116.94. Nineteen of its components rose,
while in the broader market gainers led losers in the ratio of
2:1 on moderate volume of 442.4 million shares.

The benchmark has gained just over 50 percent from its
early March low after foreign funds moved $1.5 billion into
Indian stocks in April and around $570 million in the first
three days this week.

The buying, after heavy outflows in January and February,
has lifted the BSE index 25.6 percent this year after it
slumped 52 percent in 2008.

In Asia, Japan's Nikkei .N225 rose 4.55 percent, while
MSCI's measure of other Asian markets advanced 1.8 percent. The
pan-European FTSEurofirst 300 .FTEU3 index was up 2 percent.

Reliance Industries, which has the biggest weight in the
BSE index, rose 1.8 percent to 1,914 rupees. Housing
Development Finance Corp gained 3.9 percent to 1,816 rupees.

Non-ferrous metals producer Sterlite Industries (STRL.BO)
jumped 13.8 percent to 517.45 rupees, after copper prices
advanced. Top aluminium maker Hindalco Industries (HALC.BO)
climbed 11.25 percent to 70.20 rupees.

Tata Steel Ltd (TISC.BO) rose 8.8 percent to 294.35 rupees
after the world's sixth-largest steel maker said April steel
sales from its Indian operations rose 31 percent from a year
earlier.

The 50-share NSE index .NSEI ended up 1.6 percent at
3,683.90 points.

MAIN TOP 3 BY VOLUME

* Ispat Industries ISPT.BO on 31.7 million shares

* Unitech (UNTE.BO) on 16.9 million shares

* Suzlon Energy (SUZL.BO) on 12.2 million shares

STOCKS THAT MOVED

* Suven Life Sciences Ltd (SUVP.BO) rose 6.9 percent to
16.81 rupees, after it said U.S. health regulators classified
its bulk drug making unit in the southern state of Andhra
Pradesh as acceptable to make products for the U.S. market.

* State-run Union Bank of India (UNBK.BO) fell 6 percent to
159.60 rupees after its net profit for the three months ended
March 31 fell 10.7 percent.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* India rupee trims rise as stx pare gains
[INR/]
* Indian bond yields up; buyback outcome awaited
[IN/]
* Euro flat ahead of ECB, risk appetite hits yen
[FRX/]
* Oil rises towards $58, equities lend support [O/R]
* Stocks set 2009 highs, banks lead the way [MKTS/GLOB]
* U.S. stock index futures point to rise

[.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)