MUMBAI (Reuters) - Indian gold futures, up in early trade on firm overseas markets and rising oil prices, pared gains and moved lower on a strong rupee, analysts said. A strong rupee capped some of the gains, said an analyst with a Mumbai-based commodity brokerage. The rupee strengthened 1 percent to a two-week high on Monday helped by gains in local shares after a weekend interest rate cut, which raised expectations of fresh foreign portfolio inflows. A firm rupee makes imports cheaper and brings down domestic prices. "However, firm overseas trends were supporting the domestic market and it may move up during the later part," said Devarsh Vakil, head of research, Anagram Capital Ltd. Overseas gold gained more than 1 percent on Monday, having posted its biggest monthly decline in a quarter century in October, as safe-haven buying resurfaced after the euro firmed against the U.S. dollar and oil reversed losses. India imports most of its gold. Domestic gold prices usually follow the international trend. Oil rose over $1 to near $69 a barrel on Monday, reversing earlier losses of more than $1, as Asian stock markets climbed on signs of improvement in credit markets and the dollar steadied, stiffening investor confidence. Open interest for December gold on MCX was at 8,492 lots, down from 8,588 the previous session.

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