Sri Lankan shares end little changed

COLOMBO, June 6 Fri Jun 6, 2014 7:59am EDT

COLOMBO, June 6 (Reuters) - Sri Lankan shares ended little changed on Friday, hovering near their lowest close in more than three weeks hit on May 30, as buying by foreign investors was offset by a fall in large caps such as Ceylon Tobacco Company PLC.

Analysts said continued foreign buying and expectation that interest rates would come down further will boost market sentiment.

The main stock index ended 0.02 percent, or 1.02 points, weaker at 6,279.14. On May 30, it had closed at its lowest level since May 7.

The bourse saw a net foreign inflow for the seventh straight session. Foreign investors bought 297.2 million rupees worth of shares on Friday, extending the year-to-date net foreign inflows to 4.18 billion rupees.

Turnover was 835 million rupees ($6.41 million), less than this year's daily average of 1 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 Ceylon Tobacco Company PLC fell 1.95 percent to 1,029.50 rupees. ($1 = 130.3300 Sri Lankan Rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)