* Foreign funds buy $110 mln worth of stocks on Tuesday * Inflation data eyed, seen falling below 1 pct (Updates to mid morning) MUMBAI, March 19 (Reuters) - The Indian rupee strengthened past 51 against the dollar on Thursday for the first time in three weeks as a stocks rebound drew foreign portfolio inflows. At 10:38 a.m. (0508 GMT), the partially convertible rupee was at 50.87/88, its highest level since Feb. 27 and more than a percent above Wednesday's close of 51.29/30. "The next support for the dollar/rupee is at 50.60 and with a cash rupee squeeze going on in the market, we may see that level being tested," said a dealer at a foreign bank. The rupee has gained 3 percent from a lifetime low of 52.2 hit earlier this month and latest data showed foreign investors bought $110.1 million of stocks on Tuesday, its biggest one-day purchase since Jan. 6. Capital flows in and out of the stock market are a key driver for the rupee. Foreign investors have sold more than $2.1 billion of stocks so far in 2009, pushing the rupee down more than 4 percent during the period. Last year, they sold more than $13 billion of shares, sending the rupee down by nearly a fifth. The dollar nursed large losses on Thursday, while Asian stocks and government bonds rallied after the U.S. Federal Reserve pledged to pump an additional $1 trillion into the ailing U.S. economy. [ID:nSP430840].

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