MUMBAI - The Indian rupee retreated after hitting near six-month highs on Monday following reports of fresh border tensions with China.

Indian forces foiled an attempt by Chinese troops to occupy a hill on the Asian giants' disputed border in the western Himalayas, officials in New Delhi said on Monday, following the latest flare-up between the two nuclear-armed neighbours.

"The ongoing border tensions between India and China have escalated and USDINR spot has observed strong buying pressure," said Rahul Gupta, Head of Research - Currency at Emkay Global Financial Services.

"All this while the risk sentiment was upbeat, however, going ahead geopolitical tensions will keep any fall in USDINR spot under check. The 74 level is a crucial resistance and consistent trading above that will trigger an upside move, while 73 will act as a strong support," he added.

The partially convertible rupee INR=IN ended trading at 73.61/62 per dollar, compared with its previous close of 73.39 and much weaker than the 73.25 level hit earlier in the session - its strongest since March 5.

"We have seen sharp gains in the rupee last week and early today, so the fresh round of border issues meant an immediate sell trigger for most," a trader with a private bank said.

Earlier in the day, the rupee gained tracking losses in the dollar and a rise in Asian peers. The dollar was poised to register its fourth straight monthly drop in August.

Traders said month-end dollar demand from importers also weighed on the rupee and that the local currency could continue to see a 73-73.80 range in the absence of dollar buying intervention by the central bank.

The June-quarter GDP data due to be released at 1200 GMT is being closely monitored for further direction. According to a Reuters poll, India's economy contracted 20% in the first quarter of 2020/21, its worst performance in decades.

(Reporting by Swati Bhat; Editing by Subhranshu Sahu and Sherry Jacob-Phillips) ((swati.bhat@thomsonreuters.com; twitter.com/swatibhat22; +91-22-68414381; Reuters Messaging: swati.bhat.thomsonreuters.com@reuters.net))