Sensex falls; Modi's loss in Bihar clouds outlook for reforms

MUMBAI (Reuters) - The BSE Sensex and Nifty fell on Monday after Prime Minister Narendra Modi's heavy defeat in Bihar's state elections raised concerns the government would struggle to pass policy reforms, while stronger-than-expected U.S. jobs data also weighed.

Results on Sunday showed Modi suffered a second straight regional election setback, raising worries about whether he would be able to pass key reforms such as the introduction of a goods and services tax.

Meanwhile, data on Friday showed U.S. job growth surged in October and the unemployment rate hit a 7-1/2-year low, increasing likelihood of a December rate hike from the U.S. Federal Reserve.

The Nifty was down 2.1 percent in early trading.

The rupee was at a six-week low of 66.4550/4575 per dollar, compared with 65.7550/65.7650 on Friday.

The 10-year benchmark yield was ay 7.74 percent, after testing a six-week high at 7.75 percent.

(Reporting by Mumbai markets team; Editing by Rafael Nam)