Mumbai, July 25 - Though Indian rupee recovered major part of its early losses in line with local equities, still ended lower by five paise at 4-week low of 56.16 against the US currency, despite weakness in dollar overseas, extending losses for the fourth trading session in a row.

Sustained dollar demand from importers, mainly oil refiners and fresh capital outflows also weighed on the rupee, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the domestic unit opened remarkably weak at 56.30 a dollar against overnight close of 56.11 and later moved downwards in the afternoon to a low of 56.44 on sharp fall in the benchmark sensex, which was down by over 181 points in afternoon trade.

Later, it tracked recovery in local equities and bounced back to a high of 56.11 before concluding at 56.16.

Weak dollar overseas also restricted the rupee fall as the dollar index was trading lower by 0.48 pct in European trade ahead of U.K. second-quarter gross domestic product data (GDP). New York crude oil was trading below USD 89 a barrel today.

The Indian benchmark sensex today closed down by over 72 points or 0.43 pct.

Foreign Institutional Investors (FIIs), after infusing over USD 1.7 billion throughout the current month till July 23, were net sellers to the tune of USD 37.74 billion yesterday, as per Sebi data.

Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The INR pared the day's losses to recover most of the lost ground at initial stages on a rebound in Euro over proposed banking license to be issued to ESM { European Stability Mechanism} which will allow the ESM to access to funds from ECB." PTI