UPDATE 1-Kenyan shares rise to a 14-month high, shilling stable

* Stocks seen more attractive than debt market
* Safaricom up 4.9 pct, Equity rises 3.4 pct
* Shilling has bias to weaken

(Recasts with close of markets, stocks)
By Beatrice Gachenge
NAIROBI, Sept 11 (Reuters) - Kenyan shares rose 1.1 percent
to a 14-month high on Tuesday with investors chasing higher
returns in the equity market as yields on government securities
fall, while the shilling was stable.
Foreign buying of Kenyan blue chips drove the benchmark
NSE-20 Share index up to 3,903.72 points, a level last
seen on July 7th, 2011. Year to date, the main index has gained
22 percent.
"It's the right time to move into the stock market," said
Wycliffe Masinde, head of research at Dyer & Blair.
"We have seen a big shift from government papers to
equities. There are higher returns in the equity market."
Safaricom, the leading mobile operator, rose 4.9
percent to a 17-month high of 4.25 shillings, Thomson Reuters
data showed, buoyed by its plans to invest $95 million in its
own fibre-optic cable.
Analysts say this will reduce its cost of operation.

Equity Bank climbed by 3.4 percent to 23 shillings
on expectations that this month's rate cut will boost its loan
growth book, Masinde said.
At the last auction, which was undersubscribed, yields on
the benchmark 3-month Treasury bill fell to 7.81 percent from
8.12 percent a week earlier. They hit a 2012 high of 20.8
percent in January.
KenolKobil said on Tuesday that Switzerland-based
Puma Energy would continue with due diligence ahead of a
proposed takeover deal, despite the oil marketing firm swinging
to a heavy loss in the first six months of 2012.
The shilling ended at 84.05/15 per dollar, barely changed
from Monday's close of 84.10/30.
During the session, the central bank mopped up liquidity
worth 6 billion shillings via repurchase agreements at an
average rate of 8.376 percent.
"There are a lot of dollar orders lined up at 84, so if we
break that level, we could see the shilling weaken," said Robert
Gatobu, a trader at Bank of Africa.
In the debt market, 6.19 billion shillings worth of
government and corporate bonds were traded up from 4.43 billion
shillings.
...........................Shilling spot rates
.....................Shilling forward rates
.......................Cross rates
..................................Local contributors
.......................Central Bank of Kenya Index
.....................Kenyan Bonds contributor pages
...............Treasury bill yields
..................Central bank open market operations
.........................Horizontal repo transactions
, ................Daily interbank lending rate
.............................Kenya Bond pricing
..................Real time Africa economic data
<ECI & AFR> ...........................African economic news
.................................NSE-20 Share Index
.................................NSE All Share Index
...........................FT NSE Kenya 15 Index
.......................... FT NSE Kenya 25 Index
SPEED GUIDES:

(Reporting by Beatrice Gachenge; Editing by Richard Lough and
Jason Neely)