May 30, 2011 / 12:52 PM / 9 years ago

Speculative buying drives Sri Lanka stx to over 1-wk high

* Capital Dev. jumps 75 pct on insurance stake sale rumour

* Index retreats after gaining 0.5 pct in early trade

* Rupee up on cenbank lowering dlr trading band

COLOMBO, May 27 (Reuters) - Sri Lanka’s stock market edged up on Monday, led by a 75 percent gain in illiquid financial firm Capital Development and Investment , on speculation it could profit sharply from selling its stake in an insurance firm.

Capital Development closed at a record 707.30 rupees and it has risen 214 percent in three straight sessions on speculation it will sell its stake in an insurance firm owned by National Development Bank , Capital Development’s majority owner.

National Development Bank gained 5.7 percent.

Sri Lanka’s main share index closed 0.12 percent or 8.83 points firmer at 7,468.41, to its highest since May 20.

The day’s turnover was 3.13 billion Sri Lanka rupees ($28.5 million), more than last year’s average of 2.4 billion and this year’s daily average of 2.83 billion.

Foreign investors were net sellers for 165.3 million rupees’ worth of shares on Monday and they have sold a net 6.36 billion rupees worth shares in 2011 after a record 26.4 billion in 2010.

Traded volume was 141.8 million against a five-day average of 104.8 million. The 30-day and 90-day average trading volumes were 56.7 million and 67.8 million respectively, Reuters data showed. Last year’s daily average was 67.9 million.

The bourse is still Asia’s best performer in 2011 with a 12.5 percent gain, after bringing in the region’s top return of 96 percent last year.

The rupee edged down to 109.77/80 a dollar from Friday’s 109.87/90 as the central bank reduced both the lower and upper ends of the trading band by 10 cents to 109.30/80, dealers said.

FACTORS TO WATCH:

- If foreign investors buy shares in large volumes

- If Sri Lanka can achieve an 8.5 pct growth target amid rising global oil prices and inflation

- March quarter corporate results

DATA

Colombo Stock Exchange:

Stock Market Volume (Shares)

Current Volume Average Volume 30 Days

Yield and Price of Sri Lanka’s sovereign bonds:

Maturing year Tenure amount Reuters yield

2012 5-yr $500 mln 2.648-2.221

2014 5-yr $500 mln 4.641-4.359

2020 10-yr $1,000 mln 6.2485-6.1065

* For Sri Lankan treasury securities benchmarks and data, please click and

* For interbank lending rate or call money rate or

* For secondary market rates, please see <0#LKBMK=>. ($1 = 109.870 Sri Lanka Rupees) (Reporting by Shihar Aneez; Editing by Bryson Hull)

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