MUMBAI, March 16 (Reuters) - The Indian rupee is likely to decline against the U.S. dollar at open on Thursday, as concerns over the failure of Silicon Valley Bank and the slump in the shares of a large European lender boosted demand for the safe-haven currency.

The non-deliverable forward (NDF) market indicates the rupee will open at around 82.70-82.75 to the dollar compared with 82.5950 in the previous session. The 1-month USD/INR NDF had climbed to as high as 83.15 overnight, which equates to around 82.95 on spot.

There "is a sense of inevitability" that the rupee will retest the 83-level and what happens after that will be down to the Reserve Bank of India, a trader at a Mumbai-based bank said.

Shares of European and U.S. banks declined on Wednesday, as investors who were already reeling from the demise of Silicon Valley Bank (SVB) had to contend with a sell-off in the shares of Credit Suisse, after its largest shareholder said it could not provide further support to the Swiss bank.

The rout in its shares prompted the Swiss National Bank to throw a financial lifeline.

The renewed sell-off in U.S. and European banks centring on Credit Suisse is "evidence that concerns about the resilience of the banking sector are now spreading outside of the U.S.", Capital Economics said in a note.

Central banks, including the European Central Bank, will now have to factor in the risk that the current situation may snowball into a broader loss of confidence in the banking system, the research house said.

The ECB was widely expected to raise rates by 50 basis points on Thursday prior to the current banking upheaval.

However, there is now a case that the central bank may pause to see whether the current turmoil blows over, Capital Economics said.

Money market pricing suggests traders now saw less than a 20% chance of a 50 basis point rate hike at Thursday's scheduled ECB meeting.

Near-maturity European and U.S. bond yields plunged on Wednesday, and the dollar index jumped.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.92; onshore one-month forward premium at 18 paisa ** USD/INR NSE March futures settled on Wednesday at 82.8575 ** USD/INR March forward premium at 5.5 paisa ** Dollar index down at 104.58 ** Brent crude futures up 0.2% at $73.8 per barrel after falling overnight to its lowest level since December 2021 ** Ten-year U.S. note yield at 3.5%; it fell 14 bps on Wed ** SGX Nifty nearest-month futures slightly up at 17,007 ** As per NSDL data, foreign investors sold a net $268.2 million worth of Indian shares on Mar. 14

** NSDL data shows foreign investors bought a net $94.6 million worth of Indian bonds on Mar. 14 (Reporting by Nimesh Vora; Editing by Varun H K)