Sri Lanka stx weaker on profit-taking; rupee steady

* Foreign outflow for second day

* Colombo Land hits record high; up 12.2 pct

* Rupee down; cbank widens dlr trade band amid importer demand

COLOMBO, May 23 (Reuters) - Profit-taking in bank and telecom shares drove the Sri Lankan stock market down on Monday for a second day, but speculative trade in Colombo Land and Development held back a bigger fall.

Sri Lanka's main share index closed 0.54 percent or 40.48 points weaker at 7,439.15.

Colombo Land jumped 12.2 percent to a record high of 32.30, extending its gain to more than 63 percent since May 12 on speculation that it would speed up new investments after a foreign director sold 10.2 million shares at 20 rupees to a local buyer, analysts said.

It accounted for a third of the day's turnover of 2.97 billion Sri Lanka rupees ($27.04 million), more than last year's average of 2.4 billion and this year's daily average of 2.81 billion.

Foreign investors were net sellers for 32.4 million rupees' worth of shares on Monday. They have sold a net 6.15 billion in 2011, and a record 26.4 billion in 2010.

Traded volume was 89.9 million, against a five-day average of 118.1 million. The 30-day and 90-day average trading volumes were 66.7 million and 66.1 million respectively. Last year's daily average was 67.9 million.

The bourse is still Asia's best performer in 2011 with a 12.1 percent gain, after bringing in the region's top return of 96 percent last year.

The rupee closed weaker at unchanged at 109.88/90 a dollar from Friday's 109.78/ as the central bank widened the dollar trading band by 10 cents to 109.50/90 from 109.50/80 amid heavy importer demand for greenbacks, dealers said.

FACTORS TO WATCH:
- If foreign investors buy shares in large volumes
- If Sri Lanka can achieve an 8.5 pct growth target amid rising global oil prices and inflation
- March quarter corporate results

source - www.reuters.com