* Sensex ends up 0.4 pct but investors stay cautious
    * RBI governor comments, manufacturing data help
    * Coal India, Tata Motors, Maruti among main gainers
    * Bajaj slumps 7.3 pct, iron ore miners slip

 (Updates to close)
    By Prashant Mehra
    MUMBAI, Jan 2 (Reuters) - Indian shares rose 0.4
percent in choppy new year trading on Monday as investors
cheered a government decision to allow foreigners to directly
buy stocks, but the market remained unconvinced about risk
appetite amid worries about the global economy.
    Coal India and Tata Motors climbed on
positive newsflow, but Bajaj Auto tumbled 7.3 percent
on worries over its sales growth outlook, while iron ore
exporters slid after a sharp increase in export duty.
    "Most issues still relate to the fact that investors are not
returning to the market for long-term investment," said Deven
Choksey, chief executive at K R Choksey Shares & Securities.
    "I don't see the market heading down much further, but till
results season starts, there is likely to be uncertainty."
    The main 30-share BSE index closed up 0.41 percent
at 15,517.92 points. It had fallen as much as 0.6 percent
earlier. Nineteen of its components closed higher.
    The Sensex had been among the worst performing markets in
the world in 2011, falling 24.6 percent, as high interest rates
and slowing economic growth dented investor confidence.
    Foreign funds were net sellers of more than $450 million
last year, compared with inflows of over $29 billion in 2010.
    With many world markets closed on Monday, activity was
relatively light. In the broader market, there were 749 gainers
against 666 losers on light volume of 422 million shares.
    The 50-share NSE index ended up 0.3 percent at
4,636.75.
    The government said on Sunday individual foreign investors
would be allowed to directly access the stock market from Jan.
15. It was the latest step to liberalise Asia's third-largest
economy after a year of big losses in the stock market.

    "It's a good decision for the longer term, but won't have
any impact for the moment because no foreign investor wants to
put in money right now," said Ambareesh Baliga, chief operating
officer at Way2Wealth Securities.
    On Monday, the world's largest coal miner Coal India said it
expected higher revenue after a change in its pricing method and
hoped this would offset the impact of wage increases in the near
term.
    The stock rose 3.8 percent to 312.15 rupees.
    Shares in automakers Tata Motors and Maruti Suzuki
rose 2.9 percent and 2.2 percent, respectively, after their
strong showing in December sales.
    Tata Motors said sales for the month rose 22 percent from a
year earlier, while Maruti sales fell just 7 percent despite
crippling strikes at its plants and falling demand.
    However, two- and three-wheeler maker Bajaj Auto fell 7.3
percent, after it reported a lower-than-expected 10 percent rise
in December sales, raising worries about its sales growth
outlook for the current fiscal year.
    Shares in state-run iron ore miner NMDC and
largest ore exporter Sesa Goa, a unit of Vedanta
Resources, fell more than 3 percent each after India
raised export duty on iron ore to 30 percent from 20 percent
previously with effect from Dec. 30.
    The market was also supported by comments from the central
bank's governor and positive manufacturing data.
    The Reserve Bank of India is likely to begin easing monetary
policy to address concerns about economic growth, Governor
Duvvuri Subbarao said in a BBC interview, reiterating comments
made by the central bank on Dec. 16, when it kept rates
unchanged.
    Manufacturing activity surged to a six-month high in
December thanks to a spike in factory output and new orders from
domestic and international firms, a survey of purchasing
managers showed on Monday. 	

    STOCKS THAT MOVED
    * JSW Steel rose 5.9 percent to 536.95 rupees on
hopes of higher local availability of iron ore after India
raised export duty on the steel-making raw material to 30
percent from 20 percent.
    The company had been forced to cut capacity at its plant in
southern Karnataka state after an interim ban on iron ore mining
in Bellary district by the top court.
    * Steel Strips Wheels rose 2.4 percent to 194.90
rupees after the auto parts makers said wheel rim exports rose
18 percent in December, while truck rim sales jumped 352
percent. 	

    TOP THREE BY VOLUME
    * IFCI on 63.3 million shares
    * Suzlon Energy on 18.6 million shares
    * GVK Power & Infrastructure on 15.5 million
shares	

    FACTORS TO WATCH
 * Indian rupee report
 * Indian bond report
 * Euro hits decade low vs yen, remains vulnerable
 * Oil ends 2011 up 13 pct, third year of gains
 * Treasuries lead gains in 2011, stocks suffer
 * Wall St back at Square One, with S&P flat in 2011
 * For closing rates of Indian ADRs
 (Reporting by Prashant Mehra; Editing by Aradhana Aravindan)	

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