* Speculative buying drives bourse despite Libya concerns
* Financial shares push turnover up
* Rupee flat despite importer dlr demand
COLOMBO, March 22 (Reuters) - Sri Lanka's stock market closed firmer on Tuesday as retail investors bought select shares speculatively, shrugging off concern over rising oil prices due to turmoil in oil-producing Middle Eastern and North African countries.
The island's main share index closed 0.89 percent or 63.93 points firmer at 7,220.26 mainly on speculated buying. It hit a record closing high of 7,811.82 on Feb 14.
Western powers continued air raids on the Libyan capital Tripoli as crude oil's benchmark front-month contract in New York settled at $102.33 a barrel on Monday, versus Friday's close of $101.07.
Sri Lanka imports all its oil, so the crises in Libya and the Middle East mean the island nation's economy could get hit by soaring imported inflation and a loss of earnings from Sri Lankan expatriate workers and lower tea demand from the region.
Remittances from Sri Lankan workers overseas are the island nation's biggest source of foreign exchange, and tea is its largest agricultural export.
The day's turnover was 3.6 billion Sri Lanka rupees ($32.6 million), more than last year's average of 2.4 billion rupees and higher than this year's daily average of 3.3 billion.
Foreign investors were net sellers of 902 million rupees' worth of shares on Tuesday and have sold a net 5.7 billion in 2011, after selling a record net 26.4 billion in 2010.
The bourse is Asia's best performer so far in 2011 with an 8.8 percent gain, after bringing in the region's top return with 96 percent last year.
Traded share volume was 42.9 million, against a five-day average of 49.4 million. The 30-day and 90-day average trading volumes were 75 million and 69.1 million respectively. Last year's daily average volume was 67.9 million.
The bourse is trading at a forward price-to-earnings (P/E)ratio of 14.8, one of the highest among emerging markets, compared with 12.8 in Asian markets and 11.3 in global emerging markets, Thomson Reuters StarMine data showed.
The rupee closed flat at 110.38/40 a dollar as a state bank sold dollars at a flat rate of 110.40 despite heavy importer dollar demand, dealers said.
FACTORS TO WATCH:
- Impact on stocks and rupee due to ongoing Middle East/North Africa turmoil
- Impact of rising inflation on the bourse
- The extent of rupee appreciation the central bank will allow to curb imported inflation
source - in.reuters.com
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