Shares trim weekly gain on Greece concerns

The S&P BSE Sensex lost 0.3% to 27,811.84 at the close in Mumbai, reducing its second straight weekly gain to 1.8%

Indian stocks dropped Friday, paring a weekly advance for the benchmark equity index, after days of talks failed to yield a breakthrough in the Greece debt crisis.

ICICI Bank, the nation's top private lender by assets, fell the most in two weeks. Larsen & Toubro, the biggest engineering company, declined from a three-month high. Bharat Heavy Electricals, India's largest power-equipment maker, slid for the first time in three days.

Read more from our special coverage on "GREECE CRISIS"

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The S&P BSE Sensex lost 0.3 per cent to 27,811.84 at the close in Mumbai, reducing its second straight weekly gain to 1.8 per cent. The Shanghai Composite Index fell 7.4 per cent Friday, bringing its drop from this year's high to 19 per cent. The MSCI Asia Pacific Index dropped 0.8 per cent as investors weighed Greece's prospects. Euro-area finance ministers reconvene Saturday to forge an agreement on a bailout for the European nation, which faces a debt repayment next week.

"The market had a strong rally, so we can see a corrective phase in the next few days unless there is a clear resolution of the Greek issue," David Pezarkar, the Mumbai-based chief investment officer for equities at BOI AXA Investment Managers Pvt, said in an interview with Bloomberg TV India on Friday.

"The markets have not yet factored in a default kind of situation for Greece. If that happens, then the markets could face a risk-off."

The Sensex has advanced more than five per cent from near a seven-month low on June 11, amid optimism better-than-normal rainfall will keep food prices in check and give the Reserve Bank of India more room to cut interest rates.

Banks retreat

ICICI Bank declined one per cent, the most since June 11, while Kotak Mahindra Bank retreated 1.9 per cent, halting a seven-day rising streak. Eight stocks fell on the 10-member S&P BSE India Bank index, dragging the gauge 0.7 per cent lower.

Larsen & Toubro slid 1.6 per cent, while Bharat Heavy Electricals lost two per cent. GAIL India, a state-owned distributor of natural gas, tumbled 3.2 per cent and was the worst performer on the Sensex. Metal producer Vedanta tumbled 2.6 per cent. Bharti Airtel, India's largest mobile-phone operator, slid 2.1 per cent, paring this year's rally to 19 per cent.