By Andrew Torchia

DUBAI, July 27 (Reuters) - Qatar's government deposited over $10 billion in local banks last month to offset a pull-out of deposits by foreign institutions due to the country's diplomatic crisis, Qatari central bank data showed on Thursday.

The big injection of funds, which could be repeated in coming months if the deposit outflow continues, suggests Qatar is -- for now at least -- comfortably able to handle any economic damage caused by the crisis.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar in early June, accusing it of supporting terrorism, which Doha denies. Many of their banks and portfolio investors have been pulling money from Qatar since then.

As a result, foreign customers' deposits at banks in Qatar -- the vast majority in the form of foreign-currency deposits -- shrank to 170.6 billion riyals ($46.9 billion) in June from 184.6 billion riyals in May, the data showed.

The 14.0 billion riyal decline was equivalent to 7.6 percent of foreign deposits in Qatari banks and 1.8 percent of the banks' total deposits.

But total deposits actually rose in June, to 770.7 billion riyals from 762.2 billion riyals, because of a $10.9 billion jump in the Qatari public sector's foreign currency deposits in the banking system, the data showed.

Bankers had previously told Reuters the Qatar Investment Authority, the country's sovereign wealth fund, made fresh deposits in local banks during June in response to the crisis. But the full size of the deposit injection was not disclosed.

Deposit outflows look likely to continue in coming months. Although Riyadh and its allies have not publicly ordered their banks to withdraw money from Qatar, they have warned the banks that doing business in Doha is risky.

This seems to be causing many Gulf institutions to pull out their money when time deposits expire. Fifty-five percent of cross-border deposits in Qatar's banks last year were from other nations in the Gulf Cooperation Council.

This implies about $15 billion to $20 billion of GCC deposits could be pulled out over the next year or so if political tensions do not ease. In addition, a smaller amount of cross-border loans to Qatari banks is at risk.

The data showed Qatari banks' borrowings from banks abroad, excluding placements, shrank to 46.4 billion riyals in June from 51.8 billion riyals in May.

With liquid assets estimated at around $180 billion or more, the QIA appears to have plenty of money that it could continue injecting into Qatari banks to insulate them from the outflows.

Nevertheless, the economic uncertainty caused by the deposit pull-outs does seem to be affecting Qatari banks' lending. Total credit facilities extended by the banks fell to 876.7 billion riyals from 881.5 billion riyals, the data showed.

Qatari banks' claims on banks outside the country fell to 93.8 billion riyals from 102.2 billion riyals as many Saudi, UAE and Bahraini banks reduced their business with Doha.

(Reporting by Andrew Torchia; Editing by Catherine Evans) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))