(Reuters) - The BSE Sensex climbed 1 percent on Monday, with state-run oil companies among the big gainers after the government raised state-controlled fuel prices, giving them an earnings boost. Traders said the market was riding an upbeat mood after last week's 2 percent rally, the first weekly rise since early June, and helped by demand from fund managers looking to perk up their portfolio before the quarter closes. The government raised diesel prices by about 9 percent late on Friday after months of delay, a politically unpopular move that will add to inflationary pressure but also eases the government's subsidy burden and could bolster its image among wary investors. State-run explorer Oil & Natural Gas Corp, whose subsidy burden will drop following the rise in fuel prices, led the rally, rising as much as 9.1 percent. Oil marketing companies Hindustan Petroleum Corp (HPCL.NS), Bharat Petroleum Corp (BPCL.NS) and Indian Oil Corp (IOC.NS) were up between 5.4 percent and 7.7 percent. At 10:18 a.m. (0448 GMT), the 30-share BSE index was up 0.97 percent at 18,417.62 points, with 24 components advancing. It rose more than 1 percent earlier, extending Friday's 2.9 percent rise. "The sentiment just got better after Friday's rise. The slide in crude oil prices has also given a big boost," said Kunal Sukhani, manager of institutional equities at SBICAP Securities. Foreign funds turned net buyers on Thursday with an investment of $108 million, after being sellers of $688 million over the previous eight sessions. "It remains to be seen if the market can hold on to the gains. The macro problems remain," Sukhani said, pointing to the inflationary pressures and rising borrowing costs. The 50-share NSE index was up 1 percent at 5,528.35 points. Around 166 million shares were traded on the NSE, with gainers exceeding losers in the ratio of 2.3 to 1. STOCKS ON THE MOVE * Glenmark Pharmaceuticals (GLEN.NS) was up 0.7 percent at 314.55 rupees after the drugmaker said one of its deals with Sanofi signed in May, had got U.S. clearance and it had received $25 million upfront payment from the French healthcare giant. * Top mobile carrier Bharti Airtel firmed 0.5 percent to 394 rupees after it said it plans to undertake restructuring exercise in its businesses. TOP 3 MAIN STOCKS BY VOLUME ON NSE * Lanco Infra (LAIN.NS) on 25.3 million shares * Oil & Natural Gas Corp on 8.9 million shares * Unitech on 6.2 million shares (Reporting by Ami Shah; Editing by Ranjit Gangadharan)

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