(Updates NYSE and Nasdaq reports, adds quotes)

By Rodrigo Campos

NEW YORK, July 10 (Reuters) - Short interest on the Nasdaq
and New York Stock Exchange rose in the second half of June,
the exchanges said on Friday, suggesting a continued increase
in bearish sentiment following a recent run-up in stocks.

The broad Standard & Poor's 500 index shot up about 40
percent from 12-year lows hit in early March and peaked in the
first half of June, but was essentially unchanged for that
month following large increases in March, April, and May.

The increase in short interest at the end of June suggests
some investors are betting the upward trend will reverse.

Bill Rhodes, from Rhodes Analytics in Boston, said
investors might be ready to reverse their bets.

"People who believe (the market) has rallied all it is
going to are going to go in and short it again," he said.

So far in July the S&P is down 4.4 percent, which could
mean increasing profits for short sellers, as they borrow
shares and sell them with the expectation of buying them back
at a lower price, pocketing the difference.

As of June 30, short interest rose 1.6 percent to about
15.6 billion shares on the NYSE, compared with 15.35 billion
shares as of June 15. Short interest made up 4.08 percent of
shares outstanding.

Rhodes pointed out that the more than 4 percent of shorted
shares on the NYSE amounts to less than 3 percent of the
exchange's market capitalization, which suggests shorting has
moved away from large stocks.

Short sellers "probably think the larger companies have
easier access to liquidity and capital," Rhodes said, a
position that could better allow shares of those big companies
to withstand another downturn.

On Nasdaq, short interest rose 3 percent to about 6.86
billion shares, compared with 6.66 billion shares over the same
time frame. The average number of days it would take to cover
the outstanding short positions, or the index's short ratio,
rose to 2.91 days from 2.85 days.
(For factboxes on the biggest changes in NYSE and Nasdaq short
interest, please see [ID:nN10538683] and [ID:nN10514559]).