NEW YORK (Reuters) - Short interest in U.S.-traded Valeant Pharmaceuticals International Inc shares (>> Valeant Pharmaceuticals Intl Inc) stood at its highest in nearly a year in the first half of October, exchange data showed on Monday, indicating bearish investors were stacking up against the stock even before a negative report torpedoed the shares last week.

Short interest in Valeant shot up to 10.54 million shares, or about 3.1 percent of the stock available for trading, in the period to Oct. 14, according to FactSet Research Systems data cited by the Wall Street Journal.

That was the highest since the last half of October 2014 and an increase of 49.3 percent from the 7.06 million shares, or 2 percent of the public float, at the end of September.

Overall short interest on NYSE stocks declined 2.2 percent during the same period, exchange data showed.

After posting just one double-digit daily percentage drop in the previous six years, the stock has had four such declines since Sept. 28, the largest of which was a 19.2 percent drop on Oct. 21 after short seller Citron Research alleged that Valeant's previously undisclosed ties to specialty pharmacies helped it create "phantom sales" of its products.

Shorts on Valeant hit a two-year low in the first half of August, coinciding with the stock's run to its record high.

But since hitting that two-year low of 3.15 million to Aug. 14, short interest rose steadily as the stock price tumbled. Shares closed Monday at $110.04, a 58.1 percent decline from the $262.52 record close.

Valeant on Monday defended its practices, countering the Citron Research report, but its arguments did not seem to calm investors and the stock fell 5.3 percent on the day.

Short interest in Valeant shot to 20.7 million shares, its highest since at least 2005, in June 2014 as hedge fund heavyweights Jim Chanos, on the short side, and Bill Ackman, who is long the stock, sparred publicly over the company.

(Reporting by Rodrigo Campos; Editing by Lisa Shumaker)