Sri Lankan shares fall in dull trade

COLOMBO, June 3 Tue Jun 3, 2014 8:15am EDT

COLOMBO, June 3 (Reuters) - Sri Lankan shares ended weak on Tuesday, near their lowest close in more than three weeks, led by shares of beverage makers in lacklustre trade but stockbrokers said the market was on a gaining trend due to a lower interest rate outlook.

The main stock index ended 0.10 percent, or 6.39 points lower at 6,286.02. It had closed at its lowest since May 7 on Friday.

Tuesday's turnover was 405.2 million rupees ($3.11 million), its lowest since May 26 and lower than this year's daily average of 1.01 billion rupees.

The bourse saw net foreign inflows of 8.6 million rupees, extending year-to-date net foreign inflows to 2.89 billion rupees.

Analysts said the market expects a further fall in interest rates after central bank governor Ajith Nivard Cabraal told Reuters on Friday that the central bank is creating room to cut interest rates further.

Cabraal signalled "a lot a space being created for some more dovish action".

Stockbrokers expect the market to gain in the near future due to lower interest rates after the central bank kept key rates at multi-year lows in May for the fourth straight month, as expected.

Shares of Lion Brewery (Ceylon) PLC fell 5.73 percent to 419.5 rupees a share.

($1 = 130.3500 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)