Indian Rupee Gains on cbank prop, Corp dlr Sales.

* Speculation state-run banks likely sold dlrs for cbank

* Companies, traders unwind long dollar positions

* Weak shares, shaky euro keep rupee gains limited (Updates to mid-morning)

MUMBAI, Nov 24 (Reuters) - The rupee nudged higher on Thursday as companies sold dollars after suspected central bank intervention for the second day in a row following the Indian currency's slide to a record this week.

Traders also cut long dollar positions after the central bank raised the ceiling on interest rates for deposits by non-resident Indians and eased rules on overseas borrowing by firms.

By 11:05 a.m. (0535 GMT), the partially convertible rupee was at 52.20/21 per dollar, stronger than Wednesday's close of 52.36/37. It had skidded to an all-time low of 52.73 on Tuesday.

"Corporate dollar sales helped the rupee bounce back after opening weaker. The central bank's decision to tweak certain borrowing and deposit norms also seems to be helping," said Vikas Chittiprolu, a senior foreign exchange dealer with Andhra Bank.

"I expect the dollar selling to continue through the day. The rupee is likely to trade in a wide range of 51.70 to 52.30 during the day."

The rupee, which slumped more than 14.5 percent this year and is the biggest loser in Asia, is expected to remain under pressure in the near term due to a rising import bill, slowing exports and dwindling inflows.

"The rupee's recovery today is all sentiment driven. But we need to watch out for the actual demand and supply," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

The Reserve Bank of India (RBI) on Wednesday raised the interest rate ceiling on deposits held by overseas Indians in both the rupee and foreign currencies, citing market conditions.

It also eased overseas borrowing rules for local corporates by raising the ceiling for the interest that the firms can pay.

The RBI, which has a stockpile of more than $300 billion in foreign exchange reserves, has been intervening in the market to curb excessive volatility, traders said.

"The central bank is likely to have sold dollars today in early trade as well. There was major selling by state-run banks followed by corporates which pulled the rupee back up," a senior dealer with a state-run bank said.

Citibank estimated the RBI likely sold $3 billion in intervention on Wednesday.

The RBI will intervene to smooth sharp movements in the rupee and prevent a downward spiral, but will balance this with the need to retain reserves in the event of prolonged turbulence, a deputy governor said on Wednesday.

"The response is really ... trying to remove sharp movements. That is the kind of technical and judgement criteria we used when we decided to intervene but that has not been with the objective of targeting a rate," Subir Gokarn told reporters in Paris.

Market talk of the central bank starting a direct access window for oil firms to borrow dollars could also ease the pressure on the rupee.

Traders said the rupee could likely stabilise at current levels since it has bounced back from 52.4 for a second consecutive day.

Traders said the euro's losses versus the dollar and weak domestic shares would limit the gains in the rupee.

The euro wallowed at seven-week troughs against the dollar in Asia trade, having suffered a steep fall after a "disastrous" German bond sale fuelled fears the region's debt crisis was beginning to threaten even Europe's biggest economy. The euro's moves limited sharp gains in the local unit.

Indian shares were trading down 1.1 percent as investors remain concerned over high inflation, slowing growth and a faltering local currency. (Reporting by Swati Bhat; Editing by Ranjit Gangadharan)

Source : in.reuters.com