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Monday, April 4, 2011

Sri Lanka stx slip near 3-week high; rupee flat

* Foreign investors net buyers for third straight session

* Inflation worries hurt volumes, sentiment

* Rupee flat for eighth straight session

COLOMBO, April 4 (Reuters) - Sri Lanka's stock market slipped from a three-week high on Monday as retail investors booked profits on low volumes ahead of the festival season but offshore investors bought in for a third straight session.

The island's main share index closed 0.06 percent or 4.08 points weaker at 7,373.14, down from its highest since March 11. It hit a record closing high of 7,811.82 on Feb 14.

Government data showed March inflation year-on-year rose beyond forecasts to a 26-month high of 8.6 percent.

Analysts expect April inflation to be higher as Sri Lanka celebrates its traditional New Year on April 13-14.

Analysts said worries over inflation may hurt the market with a possible supply disruption due to ongoing turmoil in the Middle East and North Africa. Oil rose on Friday, with Brent nearing $118.

The day's turnover was at 1.4 billion Sri Lanka rupees ($12.7 million), less than last year's average of 2.4 billion rupees and well below this year's daily average is 3.1 billion rupees.

Foreign investors were net buyers of shares worth 100.7 million rupees on Monday, a third straight session. They have sold a net 6.8 billion in 2011, and a record 26.4 billion in 2010.

The bourse is still Asia's best performer in 2011 with an 11.1 percent gain, after bringing in the region's best return of 96 percent last year.

Traded volume was 44.9 million, against a five-day average of 58.5 million shares. The 30-day and 90-day average trading volumes were 64.1 million and 70 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 15.5, one of the highest among emerging markets, compared with an average 12.6 in Asian markets and 11.8 for global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed flat at 110.38/40 a dollar from Friday's close after it traded at 110.30/50 on exporter conversions but bounced back, dealers said.

FACTORS TO WATCH:

- Impact of the ongoing Middle East/North Africa turmoil on stocks and rupee

- Impact of rising inflation

- Impact of the January-March quarter corporate results

source - www.reuters.com