Sri Lankan stx recover from early losses; rupee down

* Retail profit taking pulls market down before recovery

* Sluggish economic growth worries remain

* Rupee slips on importer dlr demand

COLOMBO, June 18 (Reuters) - Sri Lankan shares ended a tad firmer on Monday in thin trade as late buying in blue chips helped to offset short term profit taking by retail investors earlier in the day, brokers said.

The Colombo Stock Exchange's main index fell 1.1 p ercent in early trade, but recouped its losses and closed 0.14 percent or 6.89 points firmer at 4,998.10, its highest since May 25.

"There was profit taking from retailers, who may be uncertain about the long term outlook, but later investors bought attractive blue chips," said an analyst on condition of anonymity.

Brokers said that investors were still cautious, looking for clear directions on economic growth, interest rates, and the volatile rupee exchange rate.

On Friday, the IMF revised down its forecast for Sri Lanka's economic growth to 6.75 percent this year, from an earlier estimate of 7.5 percent, citing tighter credit and a weaker currency.

After the market closed, government data showed that the $59 billion economy grew at a faster than expected annual rate of 7.9 percent in the first quarter of 2012, slowing from 8.0 percent in the same quarter last year.

The market fell 10.8 percent in May due to economic and political worries. It has recovered 3.4 percent so far in June.
Market heavyweight and the top conglomerate John Keells Holdings gained 0.80 percent to 189.80 rupees.

The day's turnover was 295.4 million rupees ($2.25 million), well below the daily average of 935.5 million rupees this year.

Foreign investors were net sellers of 7 million rupees worth of shares on Monday, but so far this year foreign investors were net buyers of 22.62 billion rupees.

The rupee edged down to 132.10/20 against the dollar from Friday's close of 131.70/80 on importer dollar demand in light trade, dealers said. It hit an all time low of 133.60 on Tuesday on importer dollar demand.

On Thursday, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

The currency has depreciated 16.4 percent since Nov. 21, when the government allowed a 3 percent devaluation. ($1 = 131.5100 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Jeremy Laurence)

source - in.reuters.com