Metals power Indian shares to best close in 22 mths

* Up 0.7 pct; extend gains for 3rd session in a row * Metals shine on firm price trend, hopes of robust output * Bharti gains as Bangladesh approves Warid stake buy (Updates to close) By Ami Shah MUMBAI, Jan 5 (Reuters) - Indian shares climbed 0.7 percenton Tuesday to their highest close in 22 months, propelled bymetals in anticipation of robust December output data andstronger prices as a recovering economy boosts demand. Sentiment was also helped after a top economic adviser saidthere was no need to raise interest rates for now, and thecentral bank could drain excess cash to moderate inflationexpectations. [ID:nSGE60404T] Leading aluminium maker Hindalco Industries (HALC.BO) added7.4 percent to 175.20 rupees. Rival state-run NationalAluminium Co Ltd (NALU.BO) jumped 14.8 percent to 505.20rupees. "The outlook for metals stocks is good. Base metal pricesare showing a firm trend. December quarter results are likelyto be better due to the base effect," said Pawan Burde,vice-president of research at PINC Research. "Also, JSW Steel production numbers have raised hopes thatothers may follow suit," he said. JSW Steel Ltd (JSTL.BO), India's No. 3 producer of thealloy, said its crude steel output jumped 88 percent to 1.47million tonnes in the three months to December. [ID:nBMB009344] Some small steel makers also raised prices, boostingsentiment. [ID:nSGE6040BI] Non-ferrous metals producer Sterlite Industries (STRL.BO)rose 4.6 percent while Tata Steel (TISC.BO), the world'seighth-largest steel maker by output, climbed 2.4 percent. The 30-share BSE index .BSESN rose for the third straightsession and closed up 0.73 percent, or 127.51 points, at17,686.34, its best close since Feb. 28, 2008. Twenty-three of its components advanced. "The mood is positive on the back of positive data likeauto sales numbers for December and PMI data. Also, firm basemetal prices are helping," said K. K. Mital, head of portfoliomanagement services at Globe Capital. "Right now, there is nothing so negative that can hurt themarket," he added. Foreign funds pumped $17.5 billion into Indian equities in2009, powering the main index up 81 percent, its best yearlygain since 1991. ICICI Bank (ICBK.BO) rose nearly 1 percent and mortgagelender Housing Development Finance Corp (HDFC.BO) gained 0.3percent after C. Rangarajan, the prime minister's economicadviser, said an adjustment in policy interest rates was notwarranted for now. Engineering and construction firm Jaiprakash Associates(JAIA.BO), which also has interests in power, rose 5.8 percentto 162.70 rupees as its December cement shipments leapt 60percent to 1.06 million tonnes. [ID:nBMA006685] "Jaiprakash is benefitting from good delivery at its cementbusiness. Capacity expansion along with signs of firm demandtrend is helping," said Daljeet Kohli, head of research forprivate client group at Emkay Global. Bharti Airtel (BRTI.BO) gained 1.6 percent to 330.10 rupeesafter Bangladesh's telecoms authority approved its initialinvestment of $300 million in Bangladesh mobile company WaridTelecom. [ID:nSGE60407P] Energy major Reliance Industries (RELI.BO) extended itsdecline, losing 0.5 percent to 1,069.55 rupees. The stock had shed 1.3 percent on Monday as the firm soldsome shares raising $577 million to aid its buy of bankruptpetrochemicals firm LyondellBasell (LBI). [ID:nSGE60304C] "While we do not see much in terms of cost synergies forRIL from the deal, we believe it would likely give RIL accessto LBI's leading distribution network in Europe/U.S. andpresence in the Middle East through LBI's upcoming low-costcapacity," Goldman Sachs said in a note. In the broader market, gainers led losers in a ratio of1.6:1 on heavy volume of 704 million shares. The 50-share NSE index rose 0.9 percent to5,277.90. STOCKS THAT MOVED * Top vehicle maker Tata Motors (TAMO.BO) shed 2 percent to810.95 rupees as investors took profits after it had quintupledin 2009. * Dr Reddy's Laboratories (REDY.BO) climbed 2.9 percent to1,177.25 rupees after the drug maker said phase III clinicaltrial for its anti-diabetic molecule balaglitazone, beingconducted by Danish firm Rheoscience, had achieved the setparameters. [ID:nSGE6030GL] * Realty firm Godrej Properties (GODR.BO) gained 9.1percent on debut to 534.55 rupees. [ID:nSGE60403A] MAIN TOP 3 BY VOLUME * JSW Energy (JSWE.BO) on 32.3 million shares * Mahindra Satyam (SATY.BO) on 21.9 million shares * NHPC (NHPC.BO) on 16.7 million shares FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * Indian rupee report [INR/] * Indian bond report [IN/] * Dollar slips broadly, some risk assets in demand [FRX/] * Oil nears $82 on 9th day of gains; cold snap boosts [O/R] * Hopes for economy drive risk appetite [MKTS/GLOB] * Wall Street futures point to weaker start [.N] * For closing rates of Indian ADRs INADR (Editing by Ranjit Gangadharan)