* Weak U.S. consumer confidence data drags on Asian mkts * Reliance, ONGC, Sterlite fall as commodities prices drop * ICICI, Larsen, Hindalco among other major losers (Updates to mid-morning) MUMBAI, Aug 17 (Reuters) - Indian shares shed more than 2 percent on Monday, tailing weak Asian peers as concerns grew a global economic recovery may be rockier than expected after data showed U.S. consumer confidence fell to its lowest since March. Energy giant Reliance Industries (RELI.BO) dropped 2.6 percent to 1,981.60 rupees, while state-run explorer Oil and Natural Gas Corp (ONGC.BO) lost 1.5 percent to 1,201.75 rupees as oil prices dipped below $67 a barrel, extending the previous session's 4.3 percent fall. Non-ferrous metals producer Sterlite Industries (STRL.BO) eased 4.1 percent to 635.05 rupees and leading aluminium producer Hindalco Industries (HALC.BO) slid 3.2 percent to 104.70 rupees as metal prices retreated. Private-sector lender ICICI Bank (ICBK.BO), which slipped 2.8 percent to 723 rupees, and engineering and construction firm Larsen & Toubro (LART.BO) that shed 2.5 percent to 1,449 rupees were the other major losers. "The feeling that the worst is not over for the world is looming large in the minds of investors," Arun Kejriwal, strategist at research firm KRIS, said. By 10:50 a.m. (0520 GMT), the 30-share BSE index .BSESN was down 2.1 percent at 15,098.97 points, with 28 stocks declining, after falling as much as 2.2 percent in early trade. The benchmark has also been weighed down by worries that poor monsoon rains -- crucial for India's domestic-demand-led economy -- will pose a hurdle to a rapid recovery. Returning to a high growth rate is the greatest challenge facing India, with a weak monsoon making the task harder, but the economy may improve by year-end, Prime Minister Manmohan Singh said in his Independence Day speech on Saturday. The economy is likely to grow by 6.5-7 percent in the year to March 2010, a top policy adviser said last week, matching the 6.7 percent growth in 2008/09, and well below the growth rates of 9 percent or more in the previous three years. Traders said the market would be choppy till clarity emerged on the government's response to the weak monsoon. In the broader market, losers led gainers 1,236 to 759 on relatively heavy volume of nearly 100 million shares. The 50-share NSE index was down 2.05 percent at 4,485.85. Asian shares were lower, with Japan's Nikkei .N225 down 2.9 percent, while MSCI's measure of other Asian markets .MSCIAPJ fell 2.8 percent. The Reuters/University of Michigan Surveys of Consumers said on Friday its preliminary reading of the index of U.S. confidence fell to 63.2 from 66.0 in July, well below market expectations for a reading of 68.5. [ID:nN14304812] MAIN TOP 3 BY VOLUME * Firstsource Solution (FISO.BO) on 5 million shares * Mahindra Satyam (SATY.BO) on 4.7 million shares * IFCI (IFCI.BO) on 3.5 million shares STOCKS ON THE MOVE * Provogue India Ltd (PROV.BO) was up 2.4 percent at 66.75 rupees after its board approved spending 500 million rupees to buy back 5 million shares at up to 100 rupees each. * HCL Infosystems (HCLI.BO) rose as much as 3.3 percent in early trade after the board of the maker of personal computers approved raising up to 5 billion rupees through a share placement with institutional investors. The stock gave up most of the gains later and was trading up 0.4 percent at 133 rupees by 10:46 a.m. (0516 GMT) FACTORS TO WATCH * Indian rupee report [INR/] * Indian bond report [IN/] * Yen up as recovery trades blunted by US consumer data [FRX/] * Oil extends decline below $67 on gloomy econ data [O/R] * Wall St snaps 4-week winning streak as data weighs [.N] * Asian stocks fall on recovery doubts [MKTS/GLOB] * For closing rates of Indian ADRs INADR (Reporting by Pratish Narayanan and Janaki Krishnan; Editing by Ranjit Gangadharan) (janaki.krishnan@thomsonreuters.com, +91-22 6636 9138; Reuters Messaging: janaki.krishnan.reuters.com@reuters.net))

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