* Risk aversion pushes stocks to lowest close in seven weeks * No. 3 outsourcer Wipro slips on muted outlook * Consumer goods firms Hind Lever, ITC end higher (Updates to close) By Prashant Mehra MUMBAI, Jan 21 (Reuters) - Indian shares fell 3.5 percent on Wednesday to their lowest close in seven weeks as investors cut positions ahead of key earnings and on rising risk aversion among foreigners. Weak global sentiment towards financials, a grim outlook for companies and falling world markets added to the gloom, traders said. "If you see the trend, it is absolutely a flight to safety. People are getting out of whatever they don't perceive to be cash-positive companies," said Jayesh Shroff, fund manager at SBI Mutual Fund. Heavyweights Reliance Industries (RELI.BO) and Bharti Airtel (BRTI.BO) and financials led the losses as foreign investors pared their exposure. No. 3 outsourcer Wipro (WIPR.BO) fell 3.6 percent to 219.75 rupees after it gave a muted forecast as its Western clients clamoured for a cut in prices because of a global economic downturn. [ID:nBOM360891] The benchmark 30-share BSE index lost 3.53 percent, or 321.38 points, to 8,779.17, its lowest close since Dec. 3. Twenty-eight of its components ended lower. Foreigners have pulled out about $660 million from Indian shares this month, following net sales of more than $13 billion in 2008, when the main index lost more than half its value. Reliance Industries dropped 5.3 percent to 1,119.40 rupees on market forecasts the energy giant would post a drop in quarterly earnings on Thursday for the first time in three years due to lower refining margins. Leading mobile operator Bharti Airtel (BRTI.BO) dropped 5.2 percent to 583.60 rupees on worries rising competition and falling tariffs could slow down earnings growth in coming quarters. The company releases results on Thursday. [ID:nDEL294317] Weak European markets worsened sentiment, pushing banking stocks further. ICICI Bank (ICBK.BO) fell 7.1 percent to 369 rupees, State Bank of India (SBI.BO) lost 2.7 percent to 1,081.95 rupees and mortgage lender Housing Development Finance Corp (HDFC.BO) shed 7.5 percent to 1,372.25 rupees. Metal shares fell after the world's largest miner, BHP Billiton (BHP.AX), announced job cuts and closure of a mine, and as stocks jumped at the London Metal Exchange warehouses. Tata Steel (TISC.BO) fell 3.3 percent to 188.65 rupees, Hindalco lost 2.7 percent at 47.40 rupees, while Sterlite Industries (STRL.BO) dropped 8 percent to 237.25 rupees. Consumer goods firms Hindustan Unilever (HLL.BO) and ITC (ITC.BO) were among the few gainers, up 3.4 percent and 0.2 percent respectively. In the broader market, declines led advances in the ratio of 2.3:1 on moderate volume of 258 million shares. The 50-share Nifty lost 3.2 percent to 2,706.15. STOCKS THAT MOVED * Software and services firm Educomp Solutions (EDSO.BO) fell 22.1 percent to 1,534.90 rupees after a federal minister said the government would look into a media report alleging accounting fraud at the the company. [ID:nDEL417676] * Dr Reddy's Laboratories Ltd (REDY.BO) fell 5 percent to 444.70 rupees after the drug maker posted a below-forecast net profit for the December quarter. [ID:nBOM408720] MAIN TOP 3 BY VOLUME * Satyam Computer Services (SATY.BO) on 38.6 million shares * Unitech (UNTE.BO) on 14.5 million shares * Reliance Natural Resources (RENR.BO) on 10 million shares FACTORS TO WATCH * Indian rupee weakens as shares drop; outflows hurt [INR/] * Indian bond yields spike as rate cut hopes fade [IN/] * FOREX-Dollar climb knocks pound to 7-1/2-yr low, euro weaker [FRX/] * GLOBAL MARKETS-Sterling, shares slide as bank crisis deepens [MKTS/GLOB] * Oil rises above $41; eyes weak demand [O/R] * U.S. stock futures mixed after selloff; IBM in focus [.N] * For closing rates of Indian ADRs INADR ($1=49.2 rupees) (Editing by Ranjit Gangadharan)

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