Sri Lankan shares fall 0.5 pct on economic worries

By Shihar Aneez

COLOMBO, June 30 (Reuters) - Sri Lankan shares fell 0.51 percent on Monday as investors worried about slowing economic growth and expected soaring inflation and higher interest rates to take their toll on corporate earnings.

The Colombo All-Share index .CSE fell 12.59 points to 2,457.84, making its fourth straight session of losses and its lowest close since June 19, which was itself a five-month low.

Annual inflation rose to 28.2 percent in June, its highest since the current index was started in 2003, and first quarter growth slowed to a lower-than-expected 6.2 percent year-on-year from 7.6 percent in the previous quarter due to high interest rates, oil and civil war. See [ID:nCOL109662].

"High inflationary expectations stopped investors buying shares," said Geeth Balasuriya, assistant research manager at HNB stockbrokers in Colombo.

"So investors were thinking of moving to fixed deposits as interest rates are expected to go up, with high inflation."

The index rose early last week on speculation a visit by senior Indian officials was linked to efforts to restart peace talks between the Tamil Tigers and the government. It has however shed 8.7 percent since an 11-month high on April 23.

Sri Lanka's No.1 fixed line telephone operator Sri Lanka Telecom SLTL.CM fell 0.55 percent to 45.25 rupees a share, calculated on a weighted average.

Top conglomerate by market capitalisation, John Keells Holdings JKH.CM, closed 1.35 percent weaker at 110 rupees while top listed private lender Commercial Bank of Ceylon COMB.CM fell 0.4 percent to 126 rupees.