Indian shares up 2 pct on Asian rally, Reliance up

* Shares rise on stronger global cues

* Demand revival seen key to sustain gains
(Updates to late morning)

MUMBAI, Feb 4 (Reuters) - Indian shares climbed more than 2
percent on Wednesday, joining a rally across Asian markets that
were spurred by data from China and the United States.

Expectations for an approval to a U.S. stimulus plan, which
could revive demand in the world's largest economy, also
underpinned sentiment.

"The results season is over, global markets are up and
there is no negative news coming in," said Sandeep Neema, fund
manager with JM Financial Mutual Fund.

"In addition cement sales were up while we saw good numbers
from Maruti. This is encouraging buying."

By 11:42 a.m. (0612 GMT), the 30-share BSE Index
was up 1.61 percent at 9,296.74 points, after just over 2
percent.

All its components were up while in the broader market,
gainers outpaced losers 1.35:1 on moderate volume of 90.6
million shares.

The rally was led by Reliance Industries (RELI.BO), up
nearly 2 percent at 1,328.10 rupees, ICICI Bank (ICBK.BO) that
rose 1.9 percent to 399.25 rupees and Oil & Natural Gas Corp
(ONGC.BO) up 2.3 percent at 665 rupees.

"All these are frontline stocks which have been battered
down in previous sessions and valuations are looking
reasonable," Neema said.

Asian markets rose for a second day, spurred by data
showing activity in China's manufacturing sector may be
bottoming out and a surprise rise in U.S. pending home sales
provided hope for two economies critical to a recovery in
Asia's exports.

"In the short term, movements will be dictated by
company-specific events or news or global markets like today,"
said D.D. Sharma, vice president with Anand Rathi Securities.

But for the market to sustain the rise, there will have to
be a pick up in domestic demand, he said.

Cement production and sales in January showed an uptrend.

"This performance has to be sustained for some months or
one or two quarters for the market to gain continuously,"
Sharma said.

Lower interest rates was crucial for a recovery, especially
in sectors such as construction and automobiles, he said.

"We need the banks to reduce rates by at least 300-400
basis points before these sectors revive," Sharma said.

While top car maker Maruti Suzuki (MRTI.BO) and leading
biker maker Hero Honda Motors (HROH.BO) posted higher sales in
January, truck maker Tata Motors (TAMO.BO) and utility vehicle
and tractor producer Mahindra & Mahindra (MAHM.BO) saw sales
falling.

The 50-share NSE index was trading up 1.63 percent
at 2,829.15 points.

STOCKS ON THE MOVE

* Embattled software firm Satyam Computer Services Ltd
(SATY.BO) was down 3.6 percent at 51.80 rupees as its
government-appointed board meets in the southern city of
Hyderabad. Markets regulator Securities and Exchange Board of
India on Tuesday won permission to question its jailed founder
Ramalinga Raju. [ID:nBOM382009]

* Ion Exchange Ltd (IONX.BO) was up 8.3 percent at 75
rupees after it got an order worth 1.26 billion rupees from a
joint venture of NTPC Ltd (NTPC.BO). [ID:nBMB004588]

MAIN TOP 3 BY VOLUME

* Satyam Computer on 12.5 million shares

* Spice Communications (SPCM.BO) on 9.7 million shares

* DLF Ltd (DLF.BO) on 6.4 million shares

FACTORS TO WATCH
* Indian rupee report
[INR/]
* Indian bond report
[IN/]
* FOREX-Dollar edges up before jobs data, rate decisions
[FRX/]
* Oil extends gains as OPEC hints at further cuts
[O/R]
* Asian shares firm on hopes for global economy
[MKTS/GLOB]
* Wall St rallies on stimulus bets, housing, Merck
[.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)