* Investors cash in to fund IPO purchases
* Foreign investors buy 89 mln rupees' of shares
* Rupee currency closes flat
COLOMBO, Oct 26 (Reuters) - Sri Lanka's benchmark share index fell 1.3 percent on Tuesday for a second day as investors cashed in to raise money for upcoming initial public offerings and booked year-end profits, analysts said.
Sri Lanka's main share index .CSE fell 87.17 points or 1.31 percent to 6546.16. It is still Asia's best performer in 2010 with a 93.4 percent gain as the island's economy rebuilds after the end of a civil war in May 2009.
It has shed 9.2 percent since hitting an all-time high of 7,207.75 on Oct 4. Foreign investors were net buyers of 89 million rupees worth' of shares but this year still have sold a net 22.9 billion rupees' worth.
The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.1 times, compared with 13.6 and 12.8 respectively, Thomson Reuters data shows. The CSE's 14-day relative strength index is at 53.3, between the neutral limits of 30 and 70.
The diversified sector led the fall with conglomerate John Keells Holdings JKH.CM losing 2.02 percent to close at 295.9 rupees. Banking shares also fell, with top lender Commercial Bank COMB.CM shedding 1.92 percent to move to 260 rupees.
Turnover was 11.2 billion rupees ($100.7 million), nearly 19 times the 2009 daily average and well above this year's daily average of 2.4 billion.
The rupee LKR= closed flat at 111.70/72 a dollar from Thursday's close.
FACTORS TO WATCH:
- Whether commercial banks will cut lending rates as the central bank kept policy rates steady at multi-year lows
- Whether state funds will continue pushing up the index
- Performance shown in September quarter earnings
Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume Average Volume 90 Days 79,660,925 83,214,128
Yield and Price of Sri Lanka's sovereign bonds:
Maturing year Tenure amount Reuters yield LK032736246= 2012 5-yr $500 mln 3.400-3.090 LK045930114= 2014 5-yr $500 mln 4.452-4.298 85227SAH9=RRPS 2020 10-yr $1,000 mln 5.7433-5.6137
* For Sri Lankan treasury securities benchmarks and data, please click LKBMK= and LKCMTBMK=
* For interbank lending rate or call money rate CLIBOR or CLIBOS
* For secondary market rates, please see <0#LKBMK=>. ($1=111.71 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Bryson Hull)