"There was talk that India may announce the increase in duties as early as tomorrow, and people started selling," said one trader. But some late short covering helped lift prices off the day's lows by the close.The benchmark third-month January futures KPOF1 contract ended down five ringgit at 854 ringgit ($224.74) a tonne after trading as low as 847.Short covering and overnight gains in Chicago soya oil future shade pushed up the contract to a morning high of 876 ringgit.

Traders said a hike in the Indian import duties would not surprise them. "An increase has been widely expected but what is unclear is by how much the duty will rise," a trader said.

India's Food and Public Distribution Minister, Shanta Kumar said last week, the government was considering raising duties on edible oils to check imports and a decision could be taken soon.

India raised the import duty on palmolein to 44 per cent in June from 33 per cent.

The 2000/01 (April-March) India budget allows for import duties on edible oils to be increased to 100 per cent.

India was the biggest buyer of Malaysian palmoil in 1999, taking about 2.3 million tonnes or a quarter of Malaysia's total exports, compared with 1.36 million tonnes in 1998. The bulk of Malaysia's palmoil exports to India are in the form of palmolein.

Indian traders expect a duty hike in November because the domestic availability of edible oils would be the highest at that time with the crushing of the domestic winter oilseeds crop. Physical prices also retreated on the Indian duty hike talk.

November (South) crude palm oil was last offered at 835 ringgit a tonne against bids of 830. It traded between 825 and 840 ringgit.Among refined products, November RBD palm oil was offered at $232.50 a tonne FOB and December at $237.50.

There were offers for November RBD palmolein at $255 and December at $257.50. November RBD palm stearin was offered at $190 and November palm fatty acid distillate at $135.