S.Lanka stx up from 2-mo low on bargain hunting; rupee flat

By Ranga Sirilal COLOMBO, Nov 11 (Reuters) - Sri Lanka's shares gained on Wednesday from a two-month low, as investors snapped up battered shares, which had fallen on declining investor apatite due to economic woes and protests ahead of polls. The All-Share Price Index of the Colombo Stock Exchange rose 0.37 percent or 10.58 points to 2854.24, from its lowest close since Sept. 15. "There was a little bit of bargain hunting which moved the market up," said Harsha Fernando, CEO at SC Securities. Frequent protests and trade union actions have dampened investor confidence, which had been already on the decline on worries of political uncertainty ahead of national polls. The bourse has fallen 8.9 percent since the government said on Oct. 13 it will hold national polls by April. A united Sri Lankan opposition on Wednesday put its weight behind state sector trade unions and started a five-day work-to-rule campaign in their push for higher pay. Investors are still wary of a likely loss of a European Union trade concession that helped boost Sri Lanka's top export, garments, as the EU has been considering to withdraw the concession over a rights abuse probe. See Worries of lower-than-expected corporate earnings and the arrest of one of Sri Lanka's main investors in a U.S. insider trading case in mid-October, have also hampered a market rise. For more political risks, click Leading mobile phone operator Dialog Telekom, which, on Wednesday posted a net loss of 438.9 million rupees in the September quarter, ended flat at 6.75 rupees. Shares in private lender Hatton National Bank closed 2.6 percent firmer at 162.25 rupees a share. Turnover was 521.02 million rupees ($4.55 million), more than the last year's daily average of 464 million rupees. With 89.9 percent return so far this year, the CSE is still one of the best performing bourses in Asia. Sri Lanka rupee closed flat at 114.45/50 a dollar, after hitting a six month high on Tuesday as the central bank allowed a cautiously flexible exchange rate in managing the rupee against the U.S dollar. "At the moment, we continue to maintain cautious flexibility exchange rate," the Central Bank Governor Ajith Nivard Cabraal told Reuters on Wednesday. But, a state bank, through which the central bank directs the market, bought dollars at 114.45 rupees to prevent appreciation, dealers said. The rupee appreciated for the first time since Aug. 17, as the central bank allowed depreciation on Monday. Currency dealers said the central bank accepted to pay 36.28 cents premium for 28-day currency swap worth $50 million on Monday to mop up excess rupee liquidity in the market. The benchmark 91-day treasury bill yield fell to an over five-year low of 7.73 percent at a weekly auction on Wednesday. The interbank lending rate or call money rate edged up to 9.198 percent from Tuesday's 9.037 percent. For secondary market rates, please see. ($1=114.45 Sri Lankan rupees) (Additional reporting by Shihar Aneez; Editing by Ramya Venugopal) (([e-mail]; [phone]; Reuters Messaging; [e-mail])) Keywords: MARKETS SRILANKA/ (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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