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S.Lanka rupee down on IMF loan doubt, bourse down

* Rupee down on IMF loan skeptics

* International pressure on IMF loan delay mounts

* S.Lanka to face economic crisis without IMF loan-analysts

COLOMBO, May 12 (Reuters) - Sri Lanka's rupee LKR= fell on Tuesday after a British minister hinted at withholding an International Monetary Fund (IMF) loan to punish Sri Lanka, while profit-taking drove shares down from a six-month high.

The rupee fell 0.76 percent to 118.00 a dollar, before closing down at 117.35/45, 0.26 percent weaker from Monday’s close of 117.05/15.

British Foreign Secretary David Miliband on Monday raised doubts about whether Sri Lankan government could be trusted to use a $1.9 billion loan from the International Monetary Fund appropriately. [ID:nN11548652]

“The market is skeptical on the IMF loan now,” said a currency dealer. “The rupee fell due to this doubt as the market was expecting an appreciation earlier due to this loan.”

Though U.S. officials have said Washington wanted to delay the loan, the U.N. Security Council has delaying it was unnecessary. [ID:nSP278610] [ID:nN29549850]

The rupee hit a record low of 120.80/121.10 on April 23, mainly on market expectations of a further fall in the rupee as part of conditions by the global lender for the loan.

Sri Lanka’s government sought the loan from the global lender of last resort to help weather the financial storm and avert a balance of payment crisis.

The rupee has fallen around 8 percent since Oct. 30 and 3.75 percent so far this year, after the central bank allowed some depreciation to conserve dollars and help exporters.

The Colombo All-Share index .CSE shed 0.6 percent or 11.47 points to 1,888.62, from a six month high.

It rose 3.13 percent last week, mainly on the apparent end to a 25-year war against Tamil Tiger separatists, and is up 25.7 percent so far for this year.

"The market fell mainly due to profit-taking," said Hussain Gani, associate director at Asia Securities. "Also there were no positive news from the war front in last two days. The market will have a boom with some positive news from the war zone." Shares in top listed private lender Commercial Bank of Ceylon COMB.CM fell 2.08 percent to 94 rupees, calculated on a weighted average, while market heavyweight Sri Lanka Telecom SLTL.CM shed 0.64 percent to 39 rupees.

Private listed lender Hatton National Bank HNB.CM, which posted a 4 percent down in its Jan-March quarter profit on Tuesday, closed 1.05 percent down at 94 rupees.

The Insurance Board of Sri Lanka in a statement said it had suspended the registration of Janashakthi Insurance JINS.CM, which closed unchanged at 8 rupees, for three weeks and asked the company to fulfill its obligations for policies already issued. Turnover was 171.9 million rupees ($1.46 million), less than a half of last year's daily average of 464 million rupees.

The interbank lending rate or call money rate CLIBOR edged up to 11.114 percent from Monday's 11.007.

For secondary market rates, please see <0#LKBMK=>. ($1=117.40 Sri Lankan rupees) (Editing by Bryson Hull)

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