* Bourse down on financials; selling pressure seen across the board
* Foreign outflow for the third straight day
* Rupee flat on state bank dollar sales
COLOMBO, April 19 (Reuters) - Sri Lanka's stock market fell on Tuesday led by financial shares as investors sold across the board on concerns over a possible rise in market interest rates after the central bank signalled tightening monetary policy. The island's main share index closed 0.96 percent or 72.63 points weaker at 7,475.16. It hit a record closing high of 7,811.82 on Feb 14.
The benchmark 91-day treasury bill yield edged up 3 basis points at an auction on Tuesday, after the central bank raised banks' reserve ratio by 1 percentage point to fight against possible demand-driven inflation. [ID:nL3E7FC255]
Offshore investors were net sellers on Tuesday for a third session, shedding 27.2 million rupees' worth. They have sold a net 7.51 billion in 2011, and a record 26.4 billion in 2010. Turnover was 1.4 billion Sri Lanka rupees ($12.7 million), lowest since April 4, well below last year's average of 2.4 billion and less than this year's daily average of 3 billion.
The bourse is still Asia's best performer in 2011 with a 12.7 percent gain, after bringing in the region's top return, 96 percent, last year. Traded volume was 51.2 million against a five-day average of 52.5 million shares. The 30-day and 90-day average trading volumes were 60.8 million and 65.8 million, respectively. Last year's daily average volume was 67.9 million.
The rupee closed flat at 110.38/40 a dollar as a state bank, through which the central bank directs the market, sold at 110.40, the upper end of the trading band, amid heavy importer dollar demand, dealers said.
FACTORS TO WATCH:
- If central bank's monetary tightening signal shifts funds to fixed assets from the bourse
- If Sri Lanka can achieve an 8.5 pct growth target amid rising global oil price and inflation
- March-quarter corporate results
source - www.reuters.com
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