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Tuesday, May 8, 2012

Sri Lanka shares fall on halted TFC deal

* Stocks hit 11-wk low; down for 6th straight session

* Treasury orders probe on TFC share deal -media

* Rupee steady; dull trade seen dealers

COLOMBO, May 8 (Reuters) - Sri Lanka's stock market fell 1.5 percent to an 11-week low on Tuesday after the Treasury ordered an investigation of a share sale involving The Finance Company PLC, traders said.

Local media reported that President Mahinda Rajapaksa, who is also the finance minister, had ordered the suspension of a 400 million rupee deal in which state-owned National Savings Banks bought a 13 percent stake in The Finance Company at 49.75 rupees per share though it was traded at 30 rupees in the market.

The deal went through the market on April 30 and settlement was due on May 3.

The Treasury has already ordered a probe into the deal, traders and local media said.

Shares in the Finance Company fell 1.7 percent to 29.50 rupees, while the main share index fell 1.49 percent, or 79.84 points, to 5,295.60, its lowest level since Feb. 21, extending its losing streak for a sixth straight session.

Securities and Exchange Commission spokesman Tushara Jayaratne declined to say whether the regulator had begun any probe.

However, a bourse official said the Colombo Stock Exchange had already begun an investigation to assess how the deal went through it at an off-market price.

The day's turnover was 429.8 million rupees ($3.36 million), well below this year's daily average of 1.2 billion rupees.

Despite the fall, the market saw a foreign inflow of 62.1 million rupees extending the net foreign inflow so far this year to 21.5 billion rupees.

The Sri Lankan rupee ended flat at 127.80/128.00 versus the dollar in dull trade as mild importer demand for the greenback was offset by exporter dollar sales.

The rupee gained 1.6 percent last week after the treasury secretary warned of resumed market intervention if the currency dropped beyond "tolerable" levels. ($1 = 127.7500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; editing by Stephen Nisbet)

source - www.reuters.com